The Canada-U.S. Income Gap

Centre for the Study of Living Standards

No 2000-01, CSLS Research Reports from Centre for the Study of Living Standards

Abstract: This article examines the significant widening of the Canada-U.S. income gap in the 1990s. Real personal income per capita in Canada fell from 87.2 per cent of the U.S. level in 1989 to 78.1 per cent in 1999 — the largest ten-year decline in recent Canadian economic history. The article analyses three income measures (GDP per capita, personal income per capita, and disposable personal income per capita), and decomposes the gap into contributions from slower productivity growth, poorer employment rate growth, and a more favourable demographic structure. It argues that the income gap is likely to narrow over the next decade due to fiscal improvements, greater employment rate potential, and expected spillovers from the U.S. information technology productivity boom, and discusses the macroeconomic policy implications.

Keywords: Canada-US income gap; GDP per capita; personal income; living standards; productivity growth; employment rate; purchasing power parity; information technology; macroeconomic policy; 1990s (search for similar items in EconPapers)
Date: 2000-06
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