Income inequality in Canada has increased over the past 20 years. The causes of rising inequality tend to fall into two broad categories: market forces, in particular skill-biased technical change and increased globalization, and institutional forces, such as declines in unionization rates, stagnating minimum wage rates, deregulation, and national policies that favour the wealthy. Although the Canadian tax and transfer system reduces inequality, its effect has become weaker than in the past. At least two reasons for this can be identified: many programs that helped reducing inequality, such as the employment insurance program, have been restructured; and welfare incomes are not as high as they were prior to 1994.
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