Income Inequality and Consumption Inequality: a Quebec vs. the Rest of Canada Comparison

Thirty years ago the income gap between men in Quebec and their counterparts in other Canadian provinces was larger at the bottom of the income distribution than at the top. Over time the reverse has become true: the gap tends to grow as one moves from the bottom to the top of the distribution. Part of the explanation lies in the fact that educational attainment in Quebec has increased, thereby contributing to a decrease in the income gap in the lower part of the distribution. The fiscal environment has also played a role, becoming relatively more redistributive in Quebec over time. For women, the analysis shows that the fiscal regime has always been more redistributive in Quebec and the relative improvement for women in Quebec is largely due to catching-up in terms of the characteristics usually associated with higher incomes, most notably schooling. Yet, in spite of the substantial relative improvement in terms of schooling since the early 80s, one cannot conclude that there has been a corresponding closing of the overall gap in incomes. In fact, the Quebec-ROC gap in income for males in the early 80s was smaller than in 2007-2008 once one controls for differences in the composition of the respective populations in terms of productive characteristics.

As for consumption expenditures, the situation is roughly similar across Canada. Households which are constrained to devote a large share of their income to necessities such as food and clothing are relieved in much the same way by the fiscal regimes in Quebec and elsewhere in Canada. Since Quebeckers have to pay more taxes, they have to spend a larger of their disposable income for necessities than elsewhere in Canada.