Income Research Paper Series
Low Income in Canada - A Multi-line and Multi-index Perspective
Chapter 1 Introduction
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While there is a continuous demand for poverty estimates, Statistics Canada does not estimate the number of poor households, families or individuals in Canada. The imprecise and to some degree arbitrary operationalization of poverty and the essentially political nature of such judgements coupled with the statistical variability of surveys render it inappropriate for a Statistical Agency to make such judgements (Fellegi, 1997). However having low income is a significant aspect of being poor and so for some years Statistics Canada has published estimates on the population with low incomes. Thus the primary purpose of Statistics Canada's low income lines is to provide some indication of the extent, characteristics, and evolution of persons with low-income who may therefore be seen to be at-risk of poverty. It is not a precise determination of the number of people in poverty in Canada.
This report uses data from the Survey of Consumer Finances (SCF) and the Survey of Labour and Income Dynamics (SLID) and three different low-income lines to present and examine broad trends in the low-income population over a 34 year period from 1976 to 2009, with particular attention given to the changes between 2007 and 2009. The report examines the incidence, gap ratio, severity and persistence of low income across different provinces, cities, family types, as well as for specific groups with a high risk of persistent low income.
While many different low income lines have been used in Canada for many years (Wolfson 1989, Scott et al. 2008), Statistics Canada has historically focused on describing changes in the low-income population using its Low Income Cut-Off (LICO). Given the arbitrary elements inherent in any low-income line and a lack of consensus on the 'best' low income line, this report makes use of multiple low-income thresholds and is consistent with international best practices. Multiple low-income indicators are also employed to try to identify, verify, and qualify broad trends in the low-income population.
Chapter 2 presents an examination of the evolution of the incidence, gap ratio and severity of low-income at the national level from 1976 to 2009. This chapter examines differences between signals from the three low income thresholds employing advanced statistical techniques. This chapter concludes with a focus on changes between 2007 and 2009.
Chapter 3 examines whether the broad national trends identified in Chapter 2 accurately describe the experience of individuals and groups that have been identified as having a high risk of persistent low-income and social exclusion (HRSDC, 2009). The groups examined are children, seniors, persons living in lone-parent families, unattached non-elderly individuals, recent immigrants, off-reserve Aboriginal persons and persons with activity limitations.
Chapter 4 then examines low income across the ten provinces as well as seven census metropolitan areas from 2000-2009. Each of the low-income lines employs a different methodology and set of assumptions regarding the sub-national measurement of low income. This can make ranking of the provinces difficult and this is illustrated with an attempt to rank the provinces in 2009. The section includes a look at the groups of persons at risk of social exclusion for each geographic area.
Chapter 5 then presents an examination of the mobility of the low income population using standard transition and persistence measures. The chapter addresses questions of how many people enter and exit low-income and how long people remain with low-incomes. It also introduces a new persistence measure that takes into consideration the changing depth of low-income.
The appendix of the report presents a short discussion of the purpose of low income lines and a description of the three low-income thresholds used in this report (Statistics Canada's after–tax Low-Income Cut-offs and after-tax Low Income Measure as well as Market Basket Measure of Human Resources and Skills Development Canada). The measures are compared in terms of their key dimensions and differences.