Canadian vs. US Income Growth

Topic Box from the 2011 Final Benchmark Report

Real personal disposable income (PDI) per capita grew roughly three times as fast in Canada as in the US over the last six years. Income growth was similar in the two countries in the early part of the decade but growth in Canada has generally been much stronger since then. Real PDI per capita in Canada rose 15.2 percent since 2004 but by 4.9 percent in the US. This is a reverse of the stagnation that occurred in Canada in the 1990s while US incomes surged.

Strength in Canada in the last decade has almost made up for weak growth in the 1990s. Real personal disposable income per capita rose by 27.6 percent between 1990 and 2010 in Canada and by 29.6 percent in the US.

An analysis of Canada vs. US Income for 2005 through 2008 showed that differences were attributed to relative performance on labour income and other income (which includes selfemployment). Labour income growth was 11 percent in Canada and two percent in the US. Investment income performance was roughly the same in the two countries and government transfers grew more in the US. Further, the direct impact of taxation was not a factor in explaining the better Canadian growth as both gross and posttax income show similar patterns.