Wealth Inequality in Canada from 1990-2022: Evidence from the Capitalization Method

This paper estimates the distribution of wealth in Canada from 1990 to 2022 using the income capitalization method. It finds that the top 1% wealth share rose from 16.2% in 1990 to 21.3% in 2008, before falling and stabilizing at 19.3% by 2022. These estimates imply a lower level of wealth inequality than prior Canadian estimates based on Pareto-interpolation methods, largely reflecting differences in how the wealth of the top 0.1% is estimated. The results also reveal two distinct trends. The top 0.1% share is increasing, while strong wealth growth among middle-class households is compressing inequality across the remainder of the distribution, resulting in a lower overall Gini coefficient. Decomposition results show that the modest growth in top wealth shares in recent years reflects a weakening of the forces typically associated with rising wealth inequality, which were more pronounced earlier in the period.