Institute releases Tenth Working Paper - Growing prosperity is the best avenue to lower poverty in Ontario



    The Institute for Competitiveness & Prosperity releases new findings on
    the relationship between Ontario's prosperity, inequality of income
    distribution, and the incidence of poverty.

    TORONTO, Sept. 10 /CNW/ - While Ontario has one of the most prosperous
economies in the world, inequality of income distribution in the province has
been rising since 1980. A more important consideration, however, is the
persistence of poverty among high risk groups.
    Poverty and inequality are not the same.
    Inequality has also been increasing in Canada and in most developed
economies. The factors that are driving this growing inequality -
technological change and the strengthening importance of knowledge and skills
- are also important factors for prosperity growth. But it is incorrect to say
that greater prosperity is driving greater inequality.
    Poverty is concentrated among six high risk groups - high school
dropouts, recent immigrants, lone parents, unattached individuals between the
ages of 45 and 64, the disabled, and Aboriginals. Individuals in these groups
are much more likely to be at the bottom end of Ontario's income distribution
and are more likely to live in poverty. To help these people, we need greater
investments in their skills and capabilities. These can be funded more easily
if Ontario achieves its prosperity potential. Then, in a virtuous circle, if
more of these Ontarians participate in its economic development, our
prosperity will grow even further.
    These are some of the key conclusions of Working Paper 10, Prosperity,
inequality, and poverty released today by the Institute for Competitiveness &
Prosperity.
    "We have been urging Ontarians for five years to pursue a prosperity
enhancing agenda because we are concerned that we are not living up to our
full potential, and this means less opportunity for individuals and for
governments to pursue worthwhile social and investment spending," said Roger
Martin, Chairman of the Institute and Dean of the Joseph L. Rotman School of
Management at the University of Toronto. "But we sometimes hear the objection
that increasing prosperity will only benefit the rich and turn Ontario into a
Darwinian-type economy where more people will wind up in poverty." The purpose
of the working paper is to explore the relationship between prosperity, income
distribution, and poverty.
    The working paper did find that income is being distributed less equally
than it was 25 years ago - income earned by those at the top has outpaced
income earned in the middle and the bottom. This is a phenomenon that is
occurring in many developed economies including Sweden, Norway, Australia, and
the United States. Researchers who have studied this phenomenon are not in
complete agreement about the driving forces behind this inequality, but an
emerging consensus is that knowledge, skills, and technological capability are
more important with advancing globalization. Those with fewer skills will find
their income potential is reduced. Government redistributive policies through
progressive income taxes and transfer payments have reduced inequality of
income distribution, but they have not been enough to offset market forces
completely. There is, however, some evidence that inequality has not been
increasing in the past few years.
    While higher inequality appears related to long-term global factors, the
incidence of poverty seems to follow local economic trends. "We find that the
proportion of Ontarians below a low-income threshold increases during
recessions and falls during better economic times," said Martin. "And poverty
is experienced by individuals in six specific high risk groups who are nearly
four times more likely to be below Statistics Canada's Low Income Cut Off."
    We cannot afford to exclude people in these high risk groups from
opportunities to emerge from poverty and to become strong contributors to our
economy. Since each of these groups is excluded from Ontario's prosperity for
its own reasons, each requires its own solution, which the working paper
highlights. To the extent we are not successful in helping individuals in
these groups move out of poverty, we are hurting our future prosperity
potential. We need the skills and capabilities of all Ontarians in creating
economic success.
    The Institute concludes that if Ontario succeeds in realizing its full
economic potential by following an agenda for prosperity, including focused
and innovative solutions for addressing poverty, more Ontarians will
contribute to and participate in the fruits of enhanced prosperity. Increasing
prosperity and addressing poverty will create the virtuous circle Ontarians
desire.

    About the Institute

    The Institute for Competitiveness & Prosperity is an independent
not-for-profit organization established in 2001 to serve as the research arm
of Ontario's Task Force on Competitiveness, Productivity and Economic
Progress. The Institute is supported through the Ontario Ministry of Economic
Development and Trade. Reports published by the Institute are primarily
intended to inform the work of the Task Force. In addition, they are designed
to raise public awareness and stimulate debate on a range of issues related to
competitiveness and prosperity.

    Please visit the Institute's Web site www.competeprosper.ca for more
    information.

    The complete report can be downloaded directly from:
    http://www.competeprosper.ca/download.php?file=WP10.pdf





For further information:

For further information: James Milway, Executive Director of the
Institute for Competitiveness & Prosperity at (416) 920-1921 ext. 222

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