Income Research Paper Series
Measuring Voluntary Inter–household Transfers in Canada
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Inter-household transfers are a flow of economic resources between households. They are the money, goods or services that a household sends to other households with the intent of supporting the recipients' current consumption, without an expectation of repayment. As result, the recipients' economic well-being is improved by the additional economic resources from the donor. However, not all inter-household transfers are included as part of total income when measuring the economic well-being of Canadian households, or when analysing low income. Legally enforced inter-household transfers (in the form of alimony and child support payments) are included in total income; voluntary inter-household transfers (without a legal condition), which are larger than legally enforced inter-household transfers, are excluded from total income. According to Statistics Canada's Survey of Labour and Income Dynamics (SLID), Canadian households received a total of $8.5 billion1 from people not living in their household in 2008, which represents a little less than 1% of total income received. This is comparable in magnitude to major government transfers such as child tax benefits ($7.8 billion) and social assistance ($9.6 billion).2 Despite their size and potential impact on economic measurements of well-being of Canadian households, there is an absence of data on the topic for the general population, resulting in only a few studies on immigrants and cross border remittance have been carried out (Houle et Schellenberg, 2008).
This paper discusses the concepts and measurement issues related to voluntary inter-household transfers in Canada, as follows: Section 2 examines the conceptual issues of inter-household transfers; Section 3 outlines three related data sources (SLID, Survey of Household Spending [SHS], and Survey of Financial Security [SFS]) available from Statistics Canada; Section 4 analyses the size of inter-household transfers in Canada, and the trend in the last decade; Section 5 compares inter-household transfers in one survey to the next, in terms of questionnaires and reporting behaviours; Section 6 analyses the relationship between the value of inter-household transfers and household total income; Section 7 summarizes the discussion.
- This figure excludes court-ordered alimony and child support payments received. In comparison, Canadian households received $4.2 billion in inter-household transfers, in the form of alimony and child support payments.
- These estimates were calculated from Statistics Canada's 2008 Survey of Labour and Income Dynamics (SLID).