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John Woods For The Globe and Mail/john woods The Globe and Mail

Many economists have identified innovation and productivity as Canada's greatest economic challenges.

But a new study by the Action Canada Task Force argues that the country will never prosper if it doesn't also confront rising income inequality and persistently high rates of poverty.

"Canadians need to think about inequality and poverty as obstacles to – rather than consequences of – economic growth," said the authors of the study, slated to be released Friday.

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Productivity rose substantially in Canada from 1980 to 2005, while median real wages barely budged, pointed out the authors, who include University of Cambridge Gates Scholar Michael Marin, Boston Consulting Group consultant Eric Tribe and Paul Yeung, senior manager of regulatory and government affairs at Royal Bank of Canada.

"The majority of Canadians did not see the benefits of the innovation agenda," according to the study, 'Prospering Together: Addressing Inequality and Poverty to Succeed in the Knowledge-Based Economy.'

The authors also point to a growing rift in Canada between the knowledge haves and have-nots. And they argue that it's becoming much harder for workers to climb the "human capital" ladder.

"Canada is experiencing the effects of a massive, global economic transformation, one that provides enormous opportunity for those who have the right mix of human capital, and adverse consequences for those who don't," the study said.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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