Gini and Zenga Indices AVAILABLE for the Analysis of Contextual Income Inequalities within Canada

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Gini and Zenga Indices AVAILABLE for the Analysis
of Contextual Income Inequalities within Canada

• Bradley A. Corbett, PhD
• Associate Research Professor
• Richard Ivey School of Business
• University of Western Ontario

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Our Team

• Bradley A. Corbett
• Richard Ivey School of Business, University of
  Western Ontario,
• London, Ontario, Canada
• Francesca Greselin
• Dipartimento di Metodi Quantitativi per le
  Scienze Economiche e Aziendali,
• Universit_a di Milano Bicocca, Milan, Italy
• Leo Pasquazzi
• Dipartimento di Metodi Quantitativi per le
  Scienze Economiche e Aziendali,
• Universit_a di Milano Bicocca, Milan, Italy
• Rebecca Williams
• University of Western Ontario,
• London, Ontario, Canada
• Ricardas Zitikis
• Department of Statistical and Actuarial Sciences,
  University of Western Ontario,
• London, Ontario, Canada

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The study of Income Inequality is
a measure of income distribution in a society.
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Gini Coefficient

• Based on Lorenz curve
• Defined as A/(AB)
• When A0, Gini0 represents perfect equality
• When B0, Gini1 represents perfect inequality
• Uses ratio of lower incomes to overall mean of
  the population

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Global Changes in the Labour Market, Incomes and
the Canadian Context

• OECD (2011)
• Income inequality is on the rise in nearly all
  member countries
• High earner incomes are increasing twice as fast
  as low earner incomes
• Loss of middle class jobs such as manufacturing
  in developed countries
• Shift from an industrial to a service economy
• Increase in technical jobs (higher associated
  incomes)
• Increase in sercvice jobs (lower associated
  incomes)
• Higher education no longer guarantees the
  prospect of a better life but the right
  education is now important
• Some additional mitigating factors in Canada
• Poverty among aboriginal peoples
• Exploitation of natural resources in some
  provinces

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Changes in the Tails of the Income Distribution

• Frenette, Green Milligan (2007)
• Study of income inequality in Canada from
  1980-2000
• Argued existing survey data sources may have
  missed changes in the tails of the income
  distribution
• Demonstrated that the Census was a better data
  source than the standard Survey of Labour and
  Income dynamics
• Also argued many of the changes in the
  distribution of income have occurred in the tails
  of the distribution over time
• Changes in the tails may not be adequately
  detected by the Gini Index if the mean remains
  stable while the tails grow fat

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Scatter Plot of Canadian Census Divisions Gini
vs. Zenga
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Gini Index Quintiles in Canada 2006 Census,
After Tax, Census Families
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Gini and Zenga Indices Available

• 2006 Canadian Census (2005 Incomes)
• a 20 sample from the 2006 Census (6 Million)
• Household incomes
• Incentive for low income to submit tax (2000)
• Missing data supplemented by tax data
• Sampling Weights based on Census
• Provincial and Census Division levels of analysis
• Income includes market income government
  transfers
• One family member per household selected

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Gini and Zenga Indices are AVAILABLE for Merging
Provincial and Census Divisions in Canada(2006
Census Provincial shown below)
Economic Families Economic Families Economic Families Economic Families Census Families Census Families
No Adjustments No Adjustments Adjusted Adjusted No Adjustments No Adjustments
GINI Before Tax After Tax Before Tax After Tax Before Tax After Tax
BC 0.45481 0.42086 0.41603 0.37584 0.46636 0.43117
Alberta 0.47456 0.43898 0.43568 0.39430 0.48730 0.45117
Saskatchewan 0.44137 0.40688 0.40275 0.35478 0.45575 0.42123
Manitoba 0.43836 0.40314 0.39709 0.36183 0.45347 0.41783
Ontario 0.45483 0.41539 0.41592 0.37004 0.46837 0.42783
Quebec 0.43504 0.39750 0.38983 0.34236 0.44338 0.40523
New Brunswick 0.41026 0.37520 0.36600 0.32483 0.41904 0.38304
Nova Scotia 0.42159 0.38550 0.37850 0.33618 0.43059 0.39351
PEI 0.39318 0.36127 0.34777 0.30838 0.40098 0.36821
Newfoundland Labrador 0.42057 0.37953 0.38094 0.33326 0.43297 0.39080
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Contact Info

• Bradley A. Corbett, PhD
• Richard Ivey School of Business
• University of Western Ontario
• 519-850-2971
• bcorbet_at_uwo.ca