By Charles Lammam
and Hugh MacIntyre
The Fraser Institute
VANCOUVER, BC Jun 23, 2015/ Troy Media/ – Is Canada still a land of opportunity? If you base your opinion on what sometimes appears on editorial pages or social media threads, you might not be sure.
A fundamentally false perception seems to be gaining currency in some precincts in which a young person’s ability to succeed economically in Canada is predetermined by their parent’s social class. In this worldview, things like education, hard work, experience and persistence don’t matter much.
Social mobility comes with working hard
Thankfully, nothing could be further from the truth. In reality, young people in Canada are not shackled to the economic class into which they are born. Canadian society has a high degree of social mobility – both within and across generations – and that’s something we should celebrate. The message to young people should be one of hope – not doom and gloom.
Here’s the typical life path for Canadians. Many start with low-paying jobs when they’re young, in school, and have little work and life experience. After finishing college, university, or other training, a high wage isn’t guaranteed. But with hard work and skills development, earnings increase over time as we experience promotions or switch to higher paying jobs (earnings generally peak in middle-age before dropping off as retirement nears).
While this experience may sound intuitively familiar to many older Canadians, intuition alone need not apply: the data bears it out.
Consider the results from a 2012 study, Measuring Income Mobility in Canada, which used Statistics Canada data to track a sample of a million Canadians from 1990 to 2009 to see how their incomes change. The study put individual tax filers into five income groups (from lowest to highest income) with each group comprising 20 per cent of the total.
Over the 19-year period, 87 per cent of Canadians initially in the bottom income group moved to a higher group. Put differently, almost nine out of every 10 Canadians who started in the bottom 20 per cent had moved out of low-income.
Of those from the bottom 20 per cent in 1990 that moved up, an almost equal proportion moved into each of the four higher groups. Remarkably, two of every five Canadians in the bottom income group in 1990 ended up in the top 40 per cent of income earners by 2009.
These findings are consistent with other research based on Statistics Canada data.
And a growing body of research shows that Canadian families are financially mobile over generations.
Studies point to a surprisingly high level of “intergenerational mobility” – the finding that a Canadian child’s future economic success is not strongly linked to the financial position of his parents. Sure, parents can influence their children’s economic trajectory, but there are no guarantees.
Miles Corak, an economics professor at the University of Ottawa and former Statistics Canada researcher, is a pioneer in the area of measuring intergenerational mobility. His research shows that Canada is one of the most socially mobile societies in the developed world. In Canada, the relationship between the income of parents and the income of children in adulthood is weaker than in the United States and United Kingdom, and even some European countries including France and Sweden.
No guarantees of social mobility
Moreover, the same relationship between parents and children in Canada is weakest at the lower end of the income scale. That means having low-income parents does not condemn one to having low income as an adult.
While there are no guarantees of success, the opportunity to do better (or worse) than your parents is great in Canada. This is a feature of our society that should be recognized and celebrated, not dismissed or denied. Despite what the naysayers say, social mobility is alive and well in Canada.
Charles Lammam is director of fiscal studies and Hugh MacIntyre is policy analyst at the Fraser Institute.