In Canada, like in the U.S., there has been an increase in inequality over the last few decades, as those with better jobs have pulled ahead of those with worse jobs — partly because the value of education has increased, increasingly separating those with more from those with less. This all according to a recent article in the Review of Economic Dynamics by Brzozowski and colleagues.
As a result, the Gini index for family earnings, which measures inequality on a scale of 0 to 1, increased from about .31 to about .38 over the last 30 years.
Some of the trend in Canada, like in the U.S., is from higher-earning people increasingly marrying each other, too. However, more than in the U.S., the tax and transfer policies of the Canadian government have squashed that run-up in inequality. In this figure, the top line is the amount of family inequality in pre-government income, and the bottom line shows the inequality in disposable income.
Not only does disposable income exhibit much less inequality than pre-government income, but the degree of inequality is also much less variable than that of pre-government income. This suggests both that Canadian policy has been and remains redistributive, and that it smooths cyclical shocks to pre-tax income inequality.
Gini estimates differ. The CIA World Factbook has a list for all countries that puts Canada at .32, with the U.S. at .45. I don’t have a directly comparable estimate of what policy does to inequality in the U.S., but the Census Bureau came close with a report on 2005 inequality, which found that government transfers and taxes reduced the household Gini from .450 to .418. So that’s something of a comparison.