What caused the increase in poverty and inequality in OECD countries?
The OECD cites three factors that have been driving changes in inequality and poverty:6 • Changes in demography and living arrangements: Most OECD countries, including Canada, have experienced a reduction in average household size. This occurs, for example, when the share of people living alone or living in lone-parent households increases. As household size shrinks, economies of scale are lost and a higher income is needed to assure the same level of well-being. It also occurs if the share of people with lower-than-average income increases—such as the elderly. Both of these structural factors affected Canada’s inequality and poverty results. • Labour market trends: Canada has experienced increased inequality of in household incomes, mostly between middle-income and upper-income groups. Specifically, men in the middle-income groupings saw real earnings fall and both men and women in upper-income groupings experienced larger earnings growth than the middle- and lower-income groupings. •
