The poverty, growth and inequality in Canada

The relationship between income distribution and development process is one of the oldest issues in economic research. Most economists and policymakers agree that economic growth will reduce poverty in developing countries. The basic political question for policy-makers is: how much economic growth reduces poverty? If the goal is to reduce poverty, then clearly, economic growth is a plus for poverty reduction and reduction of income inequality. The main aim of this study is to examine the relationship between poverty (POV), inequality (GINI) and real GDP growth (EC) for Canada over the period 1976-2015 by using Autoregressive Distributed Lag (ARDL) Bounds Testing Approach. According to this approach, there is a cointegration relation between the series and it is found that 1% increase in growth rate is leading to a 0.006% decrease on poverty rate. In addition to this, 1% increase in income inequality (GINI) is leading to a 0.91 % increase on poverty rate. JEL Classification: D63, E10, I32, O47, O52.