Data quality, concepts and methodology

Notes and definitions

Income

This section reviews the definitions of the main income concepts and their components. In order to highlight the relationships between them, this section is organized according to the "Classification of income" ( see text box — Classification of income by source).

Classification of income by source

The concept of income

There are several important inclusions and exclusions in the concept of income:

• The concept of income covers income received while a resident of Canada or as relevant for income tax purposes in Canada . This excludes some, but not all, foreign income.
  
  
• Retirement income received as a regular pension or annuity during retirement is included, while cash withdrawals from private pension plans, including Registered Retirement Savings Plans (RRSPs), prior to retirement, are excluded.
  
  
• Realized capital gains from financial investments are excluded.
  
  
• In the Canadian System of National Accounts (CSNA) and the present income classification, taxes on capital gains are included in income taxes, as are taxes on RRSP withdrawals. Both capital gains (the taxable portion thereof) and RRSP withdrawals figure in the calculation of taxes, but are not part of total income in the CSNA or in SLID's classification of income.
  
  
• SLID's classification of income includes all refundable tax credits and benefits, including those that are not considered for income tax purposes, such as child tax benefits, the Goods and Services Tax Credit/Harmonized Sales Tax Credit, and other provincial or territorial tax credits. There are other smaller differences between SLID's total income and total income defined for tax purposes (see Other income and Other government transfers ).
  
  
• Contributions to Employment Insurance and the Canada and Quebec Pension Plans, both federal programs, are not included in income taxes, nor are they deducted from income to arrive at after-tax income. However, the CSNA recently revised its definition of taxes on production to include these payroll taxes, in accordance with international recommendations on national accounting.
  
  

Market income

Market income is the sum of earnings (from employment and net self-employment), net investment income, (private) retirement income, and the items under "Other income". It is equivalent to total income minus government transfers. It is also called income before taxes and transfers.

Earnings

This includes earnings from both paid employment (wages and salaries) and self-employment.

Wages, salaries and commission

These are gross earnings from all jobs held as an employee, before payroll deductions such as income taxes, employment insurance contributions or pension plan contributions, etc. Wages and salaries include the earnings of owners of incorporated businesses, although some amounts may instead be reported as investment income. Commission income received by salespersons as well as occasional earnings for baby-sitting, for delivering papers, for cleaning, etc. are included. Overtime pay is included.

Military personnel living in barracks are not part of the target population in SLID.

Self-employment income

This is net self-employment income after deduction of expenses. Negative amounts (losses) are accepted. It includes income received from self-employment, in partnership in an unincorporated business, or in independent professional practice. Income from roomers and boarders (excluding that received from relatives) is included. Note that because of the various inclusions, receipt of self-employment income does not necessarily mean the person held a job.

Self-employment income is subdivided into farm self-employment income and non-farm self-employment income. Farm self-employment income is reported by individuals who operate their own or a rented farm, either on own account or in partnership. Included are money receipts from the sale of farm products as well as related supplementary and assistance payments from governments. Income in kind is excluded.

Investment income

This includes interest received on bonds, deposits and savings certificates from Canadian or foreign sources, dividends received from Canadian and foreign corporate stocks, cash dividends received from insurance policies, net rental income from real estate and farms, interest received on loans and mortgages, regular income from an estate or trust fund and other investment income. Realized capital gains from the sale of assets are excluded. Negative amounts are accepted.

Retirement pensions

This is retirement pensions from all private sources, primarily employer pension plans. Amounts may be received in various forms such as annuities, superannuation or RRIFs (Registered Retirement Income Funds). Withdrawals from RRSPs (Registered Retirement Savings Plans) are not included in retirement pensions. However, they are taken into account as necessary for the estimation of certain government transfers and taxes. For data obtained from administrative records, income withdrawn from RRSPs before the age of 65 is treated as RRSP withdrawals, and income withdrawn from RRSPs at ages 65 or older is treated as retirement pensions. Retirement pensions may also be called pension income.

Other income

This sub-total includes all items of market income not included elsewhere. Among them are support payments received (also called alimony and child support). The coverage of other items depends at least to some extent on the method of income data collection, whether from administrative income tax records or by interview. Those items which are included on line 130 of the T1 tax return are well covered. These include, but are not restricted to, retirement allowances (severance pay/termination benefits), scholarships, lump-sum payments from pensions and deferred profit-sharing plans received when leaving a plan, the taxable amount of death benefits other than those from CPP or QPP, and supplementary unemployment benefits not included in wages and salaries.

Government transfers

Government transfers include all direct payments from federal, provincial and municipal governments to individuals or families. See the table Classification of income for a list of the government transfers identified separately in the latest reference year. It should be noted that many features of the tax system also carry out social policy functions but are not government transfers per se. The tax system uses deductions and non-refundable tax credits, for example, to reduce the amount of tax payable, without providing a direct income.

Child Tax Benefits

Federal child tax benefits began in 1993 and replaced both the federal Family Allowances and the Child Tax Credit. Several provincial and territorial programs have since been introduced, in addition to Quebec family allowances which already existed before 1993. To be eligible, a person must have the primary responsibility for the care and upbringing of one or more children under the age of 18. Most benefits are calculated by setting a maximum amount per family or per child and reducing that total by a certain percentage of the family's net income.

The programs which were explicitly accounted for in the data for 2001 were the federal basic benefit and National Child Benefit Supplement (together called the Canada Child Tax Benefit), the Newfoundland and Labrador Child Benefit, the Nova Scotia Child Benefit, the New Brunswick Child Tax Benefit, the New Brunswick Earned Income Supplement, the Quebec Allocation familiale, the Quebec Allocation à la naissance, the Ontario Child Care Supplement for Working Families, the Saskatchewan Child Benefit, the Alberta Family Employment Tax Credit, the BC Family Bonus, and the BC Earned Income Benefit.

Old Age Security (OAS)

The Old age security (OAS) pension is targeted to Canadian residents aged 65 and over. OAS recipients who have little or no other income may also receive the federal Guaranteed Income Supplement (GIS); and their spouses, if aged 60 to 64 (and not yet eligible for OAS and GIS themselves), receive the Spouse's Allowance.

Canada Pension Plan (CPP) and Quebec Pension Plan (QPP)

The CPP and QPP are compulsory contributory social insurance programs that provide a source of retirement income and protect workers and their families against loss of income due to disability or death.

Employment Insurance

Employment insurance is a federal program which includes the following types of benefits: regular unemployment benefits, sickness benefits, maternity and parental benefits, and benefits for persons taking approved training courses or participating in job creation or job-sharing projects. To qualify, the claimant must have ceased receiving employment income and have worked a minimum number of weeks or hours of insurable employment over the preceding period.

Social assistance

Social assistance covers many provincial and municipal income supplements to individuals and families. It is usually provided only after all other possible sources of support have been exhausted.

Workers' compensation

Workers' compensation is provided to protect all full-time and part-time employees from loss of salary due to work accidents or occupational diseases and help them to pay their medical expenses and other costs.

Goods and Services Tax/Harmonized Sales Tax Credit

Introduced in conjunction with the Goods and Services Tax in 1990, it is intended to offset the GST/HST for lower income families and individuals. In Nova Scotia , New Brunswick, and Newfoundland and Labrador it is called the Harmonized Sales Tax Credit because the administration of the tax is combined with the provincial sales tax. Included is the federal Relief for Heating Expenses paid in 2001.

Provincial/territorial tax credits

Included here are refundable tax credits other than those for children (included with child tax benefits). Some are designed to help low income individuals and families to pay property taxes, education taxes, rent and living expenses, and so on. Provincial sales tax credits such as the Quebec Sales Tax Credit and the Newfoundland and Labrador HST Credit are included. The Quebec abatement, although refundable, is not included here but rather with income taxes.

Other government transfers

This includes government transfers not included elsewhere, mainly any other non-taxable transfers. In SLID, these amounts are included with "Other income". This is partly because the coverage of any transfers not taxed through the income tax system is low. There may be under-reporting of these transfers, which are mainly collected using an open question in SLID interviews. Nonetheless, the types of transfers which have come under this heading include: training program payments not reported elsewhere, the Veteran's pension, pensions to the blind and the disabled, regular payments from provincial automobile insurance plans (excluding lump-sum payments), and benefits for fishing industry employees.

Total income

Total income refers to income from all sources including government transfers before deduction of federal and provincial income taxes. It may also be called income before tax (but after transfers). All sources of income are identified as belonging to either market income or government transfers.

Income tax

Income tax is the sum of federal and provincial income taxes payable (accrued) for the taxation year. Income taxes include taxes on income, capital gains and RRSP withdrawals, after taking into account exemptions, deductions, non-refundable tax credits, and the refundable Quebec abatement. The data are either taken directly from administrative records or estimated based on aggregate data from administrative records, as this yields better results than the amounts reported by interview.

After-tax income

After-tax income is total income, which includes government transfers, less income tax. It may also be called income after tax.

Family

Dwelling

In general terms a dwelling is defined as a set of living quarters. A private dwelling is a separate set of living quarters with a private access. A collective dwelling may be institutional, communal or commercial in nature. Of the different types of collective dwellings, SLID covers only communal dwellings.

Household

A household is defined as a person or group of persons residing in a dwelling.

Adults

Adults are defined in SLID as individuals 16 or older as of December 31^st of the reference year.

Family income

Family income is the sum of income of each adult in the family as defined above. Household income is likewise the sum of incomes of all adults in the household. Family and household membership is defined at a particular point in time, while income is based on the entire calendar year. The family members or "composition" may have changed during the reference year, but no adjustment is made to family income to reflect this change.

SLID defines households and families according to the living arrangements on December 31 of the reference year. Residents of Canada are also defined at those points in time.

Economic family type

Economic family type refers to either economic families or unattached individuals. An economic family is defined as a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common law or adoption. An unattached individual is a person living either alone or with others to whom he or she is unrelated, such as roommates or a lodger. See Family classification for more detailed groupings.

Census family type

Census family type refers to either census families or persons not in census families. The term "census family" corresponds to what is commonly referred to as a "nuclear family" or "immediate family". In general, it consists of a married couple or common-law couple with or without children, or a lone-parent with a child or children. Furthermore, each child does not have his or her own spouse or child living in the household. A "child" of a parent in a census family must be under the age of 25 and there must be a parent-child relationship (guardian relationships such as aunt or uncle are not sufficient).

Persons "not in census families" are those living alone, living with unrelated individuals, or living with relatives but not in a husband-wife or parent-unmarried child (including guardianship-child) relationship.

By definition, all persons who are members of a census family are also members of the same economic family.

Major income earner

This characteristic is important for the derivation of detailed family types (see Family classification).

For each household and family, the major income earner is the person with the highest income before tax, with one exception: a child living in the same census family as his/her parent(s) cannot be identified as the major income earner of the census family (this does not apply to economic families).

For persons with negative total income before tax, the absolute value of their income is used, to reflect the fact that negative incomes generally arise from losses "earned" in the market-place which are not meant to be sustained. In the rare situations where two persons have exactly the same income, the older person is the major income earner.

Family classification

SLID uses the major income earner to classify families.

Classification of family types

Elderly family

The major income earner is aged 65 or over.

Non-elderly family

The major income earner is under age 65.

Married couples/spouses

Married couples, including legally married, common-law and same-sex relationships, where one of the spouses is the major income earner.

Children

A child or children (by birth, adopted, step, or foster) of the major income earner under age 18. Other relatives may also be in the family.

Lone-parent family

Includes at least one child as defined above. Families where the parent is 65 years or older are excluded.

Relative

A person related to the major income earner by blood, marriage, adoption or common-law.

Other relative

A person in the economic family who is not the major income earner nor his/her spouse or child under age 18.

Analytical concepts

Current dollars versus constant dollars

Current dollars are what we usually mean when we refer to a currency in the current time period. The term "constant dollars" refers to dollars of several years expressed in terms of their value ("purchasing power") in a single year, called the base year. This type of adjustment is done to eliminate the impact of widespread price changes.

Current dollars are converted to constant dollars using an index of price movements. The most widely used index for household or family incomes, provided that no specific uses of the income are identified, is the Consumer Price Index (CPI), which reflects average spending patterns by consumers in Canada.

The text table 1 shows the annual rates of the Consumer Price Index. To convert current dollars of any year to constant dollars, divide them by the index of that year and multiply them by the index of the base year you choose (remember that the numerator contains the index value of the year you want to move to). For example, using this index, $10,000 in 1997 would be $10,548 in 2000 constant dollars ($10,000 × 113.5/107.6 = $10,548).

Text table 1
Consumer price index, annual rates, 1992=100

Earner/Income recipient

An earner is a person who received income from employment (wages and salaries) and/or self-employment during the reference year. The term income recipient is generally used for someone who received a positive (or negative) amount of income of any given type.

Mean income (average income)

The mean or average income is computed as the total or "aggregate" income divided by the number of units in the population. It offers a convenient way of tracking aggregate income while adjusting for changes in the size of the population.

There are two drawbacks to using average income for analysis. First, since everyone's income is counted, the mean is sensitive to extreme values: unusually high income values will have a large impact on the estimate of the mean income, while unusually low ones, i.e. highly negative values, will drive it down. (See also Recipients versus non-recipients and Negative values.) Secondly, it does not give any insight into the allocation of income across members of the population. To examine allocation of income, measures such as Percentiles or Gini coefficients may be used.

Recipients versus non-recipients (zero values)

For every table showing average incomes, it must be kept in mind whether non-recipients of that type of income are included or excluded from the population. In the case of total family income, the difference from including or excluding units with zero income is small since there are very few such families. However, if one is interested in the average amount of individual self-employment earnings, the value will be quite different if one includes those persons who were not self-employed.

Negative values

Negative income amounts can arise in two ways: net losses from self-employment (expenses exceed receipts), or net investment losses (losses exceed gains). As with zero values, negative values can have a large impact on results. In general, the published income tables treat negative values no differently than positive values, but there are a few exceptions: for the calculation of both Gini coefficients and the low income gap, negative values are converted to zeroes; and in the derivation of the major income earner of a family or household, the absolute value is used instead (see Major income earner).

Percentiles

Income percentiles, like quintiles and deciles, are a convenient way of categorizing units of a given population from lowest income to highest income for the purposes of drawing conclusions about the relative situation of people at either end or in the middle of the scale. Rather than using fixed income ranges, as in a typical distribution of income, it is the fraction of each population group that is fixed.

First, all the units of the population, whether individuals or families, are ranked from lowest to highest by the value of their income of a specified type, such as after-tax income. Then the ranked population is divided into five groups of equal numbers of units, called quintiles. Analogously, dividing the population ranked by income into ten groups, each comprising the same number of units, produces deciles.

Most analyses should be carried out on the people of different percentiles within one population distribution. Care should be taken in making comparisons between percentiles that resulted from different distributions, because any difference in either the population or the income concept used to rank units could have a large effect. It is probable that both the income ranges represented by each percentile and the people making up each percentile will be different.

Median income

The median income is the value for which half of the units in the population have lower incomes and half has higher incomes. To derive the median value of income, units are ranked from lowest to highest according to their income and then separated into two equal-sized groups. The value that separates these groups is the median income (50th percentile).

Because the median corresponds exactly to the midpoint of the income distribution, it is not, contrary to the mean, affected by extreme income values. This is a useful feature of the median, as it allows one to abstract from unusually high values held by relatively few people.

Since income distributions are typically skewed to the left - that is, concentrated at the low end of the income scale - median income is usually lower than mean income.

Implicit rate of government transfers or taxes

The implicit rate of government transfers or taxes is a way of showing the relative importance of transfers received or taxes paid for different families or individuals. This concept is similar, but not identical, to the effective rate of taxation. For a given individual or family, the effective rate is the amount of transfers/taxes expressed as a percentage of their market income, total income, or after-tax income. The implicit rate for a given population is the average (or aggregate) amount of transfers/taxes expressed as a percentage of their average (or aggregate) income.

Family size adjustment (equivalence scale)

Family income is insufficient to understand a family's financial well-being without knowing how many people share it, so one often wants to take the family size into account. Two approaches have been used to help with analysis of family income. The first approach is to produce data by detailed family types, so that within a given family type, differences in family size are not significant. In fact, many income measures have been crossed by detailed family types in the published tables. The second approach is to take family size into account by adjusting the income amount for purposes of analysis. The major challenge of the second approach is to select an appropriate adjustment factor. While there is no single best method, it is still better to apply some kind of adjustment factor rather than no adjustment at all.

The simplest adjustment is to use per capita income: to divide the family income by family size. Per capita income, however, tends to underestimate economic well-being for larger families compared to smaller families since it assumes equal living costs for each member of the family. But some costs, primarily those related to shelter, decrease proportionately with family size and may also be lower for children than for adults. For example, the shelter costs for an adult married couple with no children are arguably not much more than those for an adult living alone.

To take such economies of scale into account, it is common to use an "equivalence scale" to adjust family incomes. Instead of implicitly assuming equal costs for additional family members, as the per capita approach does, the equivalence scale is a set of decreasing factors assigned to the first member, the second member, and so on. Dividing the income value by the sum of the factors assigned to each member derives the adjusted income amount for the family.

There is no single equivalence scale in use in Canada. The one used in the published income tables and in concepts such as the Low Income Measure (LIM) has, however, achieved a high degree of acceptance. In this equivalence scale, the factors are as follows:

• the oldest person in the family receives a factor of 1.0;
  
  
• the second oldest person in the family receives a factor of 0.4;
  
  
• all other family members aged 16 and over each receive a factor of 0.4; and
  
  
• all other family members under age 16 receive a factor of 0.3.
  
  

The LIM divides by a factor of 1.4 for computing a married couple's per person income instead of a factor of 2.0 (the family size). An income of $56,000 for a married couple would give each adult a standard of living equivalent to that of an adult living alone who had an income of $40,000, as compared to an adult with $28,000 when calculated on a per capita basis.

Gini coefficient

The Gini coefficient measures the degree of inequality in the income distribution. Gini coefficients are published for market income, total income and after-tax income, and are used to compare the uniformity of income allocation between different income concepts, across different populations or within the same population over time.

Values of the Gini coefficient can range from 0 to 1. A value of zero indicates income is equally divided among the population with all units receiving exactly the same amount of income. At the opposite extreme, a Gini coefficient of 1 denotes a perfectly unequal distribution where one unit possesses all of the income in the economy. A decrease in the value of the Gini coefficient can, by and large, be interpreted as reflecting a decrease in inequality, and vice versa.

Low income definitions

Low income cut-off (LICO)

Low income cut-offs (LICOs) are established using data from the Family Expenditure Survey, now known as the Survey of Household Spending. They convey the income level at which a family may be in straitened circumstances because it has to spend a greater proportion of its income on necessities than the average family of similar size. Specifically, the threshold is defined as the income below which a family is likely to spend 20 percentage points more of its income on food, shelter and clothing than the average family. There are separate cut-offs for seven sizes of family - from unattached individuals to families of seven or more persons - and for five community sizes - from rural areas to urban areas with a population of more than 500,000.

Calculation of low income cut-offs

The first step in the production of a set of low income cut-offs is to calculate the average proportion of income that a family spends on food, shelter and clothing. The 1992 Family Expenditure Survey found that, on average, families spend 44% of their after-tax income (and 35% of their total “before-tax” income) on these necessities. Then, 20 percentage points are added, giving 64% of after-tax income. This is done on the grounds that a family spending more than this proportion of its income on necessities is significantly worse off than the average family. The final step is to look at the distribution of income by expenditure and determine, using a regression line, the level of income at which a family tends to spend 20 percentage points more than the average on the necessities of food, shelter and clothing.

Updating and rebasing the low income cut-offs

There are two reference years that play a part in the calculation of a set of low income cut-offs: the base year and the income reference year. The base year supplies the average spent on food, shelter and clothing. This percentage is used to derive a set of cut-offs that are suitable for use with income data from that year. cut-offs for other income reference years may be obtained by applying the corresponding Consumer Price Index (CPI) inflation rate to the basic set of cut-offs.

Using the CPI to update the cut-offs takes inflation into account, but does not reflect any changes that might occur over time in the average spending on necessities. To measure these changes, Statistics Canada has developed a new set of spending averages after each Family Expenditure Survey. These are referred to as “bases” because the average spending on necessities in that base year drives the calculation of the cut-offs. The two most recent base years are 1992 and 1986. cut-offs based on 1992 are most commonly applied by data users and are available for the income reference years from 1980 onwards.

Low income rate

Low income rates can be calculated for persons or for families. In either case, the income compared to the cut-off is the income of the entire economic family. “Persons in low income” should be interpreted as persons who are part of low income families, including persons living alone whose income is below the cut-off. Similarly, “children in low income” means “children who are living in low income families”. In other words, all members of an economic family have the same low income status, but they are counted separately when person-based low income rates are calculated.

To calculate the low income rates, the family size and community size are used to find the appropriate cut-off. Then the family income is compared to that cut-off. If a family low income rate is being calculated, then the family is counted as being in low income if its income is less than the cut-off. If a person low income rate is being calculated, then all persons in the family are counted as being in low income if the family income is less than the cut-off.

Use of after-tax and before-tax LICOs

The average portion of income that families spend on food, shelter and clothing, which figures prominently in the low income cut-offs, is undoubtedly a useful gauge of economic well-being no matter which income concept is used. The choice of after-tax income, total income or market income depends on whether one wants to take into account the added spending power that a family gets from receiving government transfers or its reduced spending power after paying taxes.

Statistics Canada produces two sets of low income cut-offs and their corresponding rates - those based on total income (i.e., income including government transfers, before the deduction of income taxes) and those based on after-tax income. Derivation of before-tax versus after-tax low income cut-offs are each done independently. There is no simple relationship, such as the average amount of taxes payable, to distinguish the two types of cut-offs.

The choice to highlight after-tax rates was made for two main reasons. First, income taxes and transfers are essentially two methods of income redistribution. The before-tax rates only partly reflect the entire redistributive impact of Canada's tax/transfer system because they include the effect of transfers but not the effect of income taxes. Second, since the purchase of necessities is made with after-tax dollars, it is logical to use people's after-tax income to draw conclusions about their overall economic well-being.

Differences in after-tax and before-tax rates

After-tax low income cut-offs and the resulting after-tax rates have been published back to 1980. The number of people falling below the cut-offs has been consistently lower on an after-tax basis than on a before-tax basis. This result may appear inconsistent at first glance, since incomes after tax cannot be any higher than they are before tax, considering that all transfers, including refundable tax credits, are included in the definition of “before-tax” total income. However, with a relative measure of low income such as the LICO, this result is to be expected with any income tax system which, by and large, taxes those with more income at a higher rate than those with less. These “progressive” tax rates compress the distribution of income. Therefore, some families in low income before taking taxes into account are relatively better off and not in low income on an after-tax basis.

Low income gap

The low income gap, previously called “low income deficiency”, is the amount that a low income family falls short of the relevant low income cut-off. For the calculation of this gap, negative incomes are treated as zero.

For example, a family with an income of $15,000 and a low income cut-off of $20,000 would have a low income gap of $5,000. In percentage terms this gap would be 25%. The average gap for a given population, whether expressed in dollar or percentage terms, is the average of these values as calculated for each unit.

Market basket measure (MBM)

Human Resources Development Canada collaborated with the provincial and territorial ministries of social services to develop a “market basket measure” (MBM). The approach is to cost out a basket of necessary goods and services including food, shelter, clothing and transportation, and a multiplier to cover other essentials. The results define levels of income needed to cover the cost of the basket.

The same argument that can be made for using after-tax low income rates can be made for using after-tax income to compare to the MBM thresholds. That is, a measure of well-being should take into account what is actually available to spend. The income concept that has been proposed for comparisons with the MBM thresholds goes even further than after-tax income by also removing other non-discretionary expenses such as support payments, work-related child care costs and employee contributions to pension plans and to Employment Insurance. Statistics Canada is collecting some of the data necessary to produce rates based on the market basket measure.

Comparisons between data up to 1995 and data since 1996

The data for the historical period (years prior to the last) are not necessarily the same as in previous editions. Data up to and including 1995 are drawn from the Survey of Consumer Finances (SCF, last conducted for reference year 1997), and data for 1996 and onwards are drawn from the Survey of Labour and Income Dynamics (SLID). For this 2002 edition of tables, all other changes from the 2001 edition are very minor.

Different surveys will produce slightly different estimates on the same topics due to a variety of factors. Every attempt was made to minimize and monitor these differences between the two income surveys, while nonetheless making some important improvements in survey practices. Before replacing the SCF series with SLID, a careful study was done on the overlapping reference years, particularly the years 1996 and 1997, as SLID only acquired its full sample size in 1996. The results of the study are contained in the Income Statistics Division research paper, A Comparison of the Results of the Survey of Labour and Income Dynamics (SLID) and the Survey of Consumer Finances (SCF) 1993-1997: Update (75F002MIE99007). All ISD research papers are available free of charge on the Statistics Canada internet site ().

In short, it was found that the two surveys told essentially the same story for all of the main income concepts. It is still possible, nonetheless, that for some characteristics the data trends could reveal a “break” as a result of the change in survey. Such a break would likely appear as a noticeable upward or downward shift in a data series between the years 1995 and 1996. It represents a change in the data which is attributable to the two surveys having different samples and different methods (such as the use of tax data in the case of SLID), rather than a true change in the characteristics of the population. Users are advised to take note of the following survey differences which are known to exist and to have had an impact on the data trends at some detailed levels.

Better coverage of small income amounts

One notable improvement that occurred as a result of new survey techniques introduced in SLID is better coverage of small income amounts received by respondents. It has been observed in surveys conducted by questionnaire that respondents tend to forget or neglect small income amounts they received in the past. This means an underestimation of income in general, and in particular, it means that many people who received a small amount of income instead report no income at all (there are differences, however, depending on whether the income concept includes or excludes government transfers).

The use of administrative income tax files in SLID for the majority of sample respondents means that there is considerably better coverage of non-zero amounts of income, and in general, a greater number of recipients of most kinds of income. Another technique used by SLID which may have improved coverage is that, even for respondents who report income by interview instead of via their tax records, there are two chances to prompt them for income sources, and therefore a greater likelihood of capturing an amount. This is because some income concepts are touched on in the January interview and then covered in the May interview, where it is possible to remind the respondent of a positive response in January. The types of income for which such “dependent interviewing” is used are earnings (from employment or self-employment), employment insurance benefits, social assistance, and workers’ compensation.

Detailed family types

The standard published “detailed family types” for economic families have changed in one regard. In the SCF, they are derived with reference to the “head of family”. In SLID, the same categories are used but in reference to the “major income earner”. (See also “Major income earner” under “Family definitions” in the section on “Notes and definitions”.) SLID dropped the concept of head of family entirely, as it has little relevance in a modern context. But some sort of prioritization of people within a family is useful to uniquely identify the type of family, even if it is somewhat arbitrary.

The change in family concepts resulting from the transition from SCF to SLID has not affected data produced for the entire population of families consisting of two or more persons. However, for some of the detailed family types, the estimated number of families underwent a one-time increase or decrease between 1995 and 1996. Without drawing conclusions about the precise net effects of these changes, the following points can be made.

First, whereas the previous definition always gave husbands the status of head of family rather than wives, with the major income earner concept there is no distinction by sex, and it is possible for the wife to qualify. Since it still holds that wives are on average younger than husbands at least for older couples, this has caused a shift from elderly families to non-elderly families.

Second, the head of family concept gave preference to parents over their adult children and, where there is no husband-wife or parent-child relationship in the family, it gave preference to older members over younger ones. Now, younger adults are much more likely to qualify as major income earners than they did as heads of families. As a result, we see significant decreases in the number of “other elderly families” and “married couples with other relatives”, and a large increase in the number of “other non-elderly families”. (See the section “Family definitions” for the precise definitions of family types.)

Comparisons with previous editions

The data for years prior to 2002 are not necessarily directly comparable to those of the 2001 edition. For example, dollar amounts are always expressed in constant dollars of the latest reference year. (See "Current dollars versus constant dollars" under "Analytical Concepts".) With the 2002 edition of this publication, data for 2001 were revised

The Survey of Labour and Income Dynamics uses estimates of the target population - which are derived independently from the survey – as benchmarks for producing survey estimates. These population estimates start with a Census and are then updated using administrative data to reflect the current population of Canada. Using these population counts reduces the sampling error and coverage bias of survey estimates. It also provides consistency of estimates across household surveys. Accurate population numbers are crucial in determining estimates from a sample survey like SLID. In order to translate the results of the survey into population estimates, each individual in the sample is assigned a weight indicating the number of persons in the population represented by that sample member.

Periodically, the weights used in the survey are updated to reflect the availability of new population benchmarks provided by a new census and new annual inter-censal estimates. When this happens, the weights are revised historically in order to maintain a consistent time series. Methodological improvements in the derivation of weights may also be implemented in a weight revision.

The most recent historical weight revision for the Survey of Labour and Income Dynamics occurred with the release of data for 2000. It was carried out on data back to 1980, such that figures for the entire time series changed. Traditionally, weights are derived using population benchmarks by province, age and sex. Since the 2000 weight revision, the weights in SLID also respect population benchmarks by household size and economic family size.