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Immigrant low-income rates: The role of market income and government transfers

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By Garnett Picot, Yuqian Lu and Feng Hou

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Between 1980 and 2005, the after-transfer, before-tax low-income rate rose among immigrants from 17% to 22%, while it fell among the Canadian-born.

The rise in the low-income rate among immigrants is primarily due to falling family earnings. The market income-based low-income rate rose from 24% in 1980 to 33% in 2005.

Low-income rates are also influenced by government transfers. Among all immigrants, the transfer system reduced the low-income rate by 29% in 1980 and by 34% in 2005. But this increased effect was not sufficient to prevent low-income rates from rising among immigrants.

Low-income rates are higher among immigrant children than children with Canadian-born parents and the gap is increasing. These differences are again largely related to differences in the market income of their parents.

Unlike the situation among other immigrant groups, low-income rates fell among immigrant seniors over the past quarter century. This reduction was the result of both increasing family market income and the transfer system's increased tendency to reduce low income over time.