Income Research Paper Series
Low-income statistics for the population living on reserve and in the North using the 2016 Census

Abstract

This paper presents low-income statistics from the 2016 Census for the population residing in First Nation communities (on reserve), in the North and in Inuit Nunangat. The selected measure for the paper is the Low-income measure, after-tax computed from the household incomes, adjusted for household size, of the whole population of Canada, including those residing on reserve and in the territories.  Results are presented for Canada overall as well as for the population residing on reserve, in the territories and in Inuit Nunangat, which includes Inuvialuit Region of the Northwest Territories, Nunavik in Quebec and Nunatsiavut in Labrador. Methodological considerations in the application of the Low-income measure to these geographies are also discussed. It must be acknowledged that the Low-income measure used in this paper is not Canada’s Official Poverty Line and statistics generated from this measure should not be interpreted as poverty rates.

Foreword

This paper provides detailed low-income statistics for the population living on reserve and in the North.  It follows a companion paper published in April 2019 titled Interpreting low-income statistics for the on-reserve and territorial populations using the Census and the National Household Survey data (Heisz, 2019) which was intended to provide support to users of the 2016 Census and the 2011 National Household Survey (NHS) who wish to better understand income patterns or study low-income rates for the on-reserve and territorial populations, or who wish to examine the low-income rate for provinces or Canada without excluding these regions.

Statistics Canada currently produces low-income statistics based upon three approaches: the Low-income cut-offs (LICO), the Low-income measure (LIM), and the Market Basket Measure (MBM). The MBM represents Canada’s Official Poverty Line. Each approach uses a different methodology to derive a set of income “thresholds” below which a family or household is deemed to be in low income. In this paper, the LIM concept is the approach used to measure low income for the on-reserve and territorial geographies using data from the 2016 Census. The concept underlying the LIM is that all persons in a household have low income if their household income is less than half of the median income of all households, adjusted for household size. Statistics generated from this methodology should not be interpreted as poverty rates. However, the LIM methodology requires only information on household income and household size and can thus be applied to on-reserve and territorial geographies using income data from the Census.

The LICO and the MBM, the two other approaches to produce low-income statistics, cannot currently be implemented for the on-reserve or territorial geographies. This is because these methodologies call for additional data on prices and expenditures on necessities, which is not currently available for these regions. Statistics Canada is currently undertaking efforts to collect the data necessary to allow for the calculation of the MBM in the territories (Gustajtis, Lam and McDermott, 2021).

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Canada’s Official Poverty Line

In August 2018, the Canadian government released Opportunity for All: Canada’s First Poverty Reduction Strategy.  Followed by the Royal Assent in June 2019 of Bill C-97, the “Market Basket Measure” (MBM) was set as Canada’s first Official Poverty Line.  For more information regarding Canada’s Official Poverty Line, please refer to Opportunity for All: Canada’s First Poverty Reduction Strategy.

In addition to setting the MBM as Canada’s Official Poverty Line, Opportunity for All proposes a plan to improve the measurement of poverty in Canada. This plan includes expanding the sample of the Canadian Income Survey so that Canada’s Official Poverty Line can be calculated in the territories and so that more detailed analyses of poverty can be undertaken for specific groups. In addition, Statistics Canada will explore the feasibility of ensuring that the basket of goods and services reflects the unique costs of living in Canada’s northern and remote communities.

Finally, the Government will work with National Indigenous Organizations and others to identify and co-develop indicators of poverty and well-being that reflect the multiple dimensions of poverty and well-being experienced by First Nations, Métis and Inuit.

Introduction

This paper presents low-income statistics for the Canadian population residing on reserve and in the North using data from the 2016 Census. Until recently, low-income statistics were not produced for reserves and the territories. This paper therefore includes a descriptive analysis of low-income dynamics on reserve and in the North, and a discussion of methodological considerations in the application of the Low-income measure (LIM) to these geographies.

Low-income measures have been widely used as indicators of well-being and poverty.  Statistics Canada published three measurements of low income: the Market Basket Measure (MBM), which is Canada’s Official Poverty Line, the Low-income cut-offs (LICO), and the LIM. The MBM and the LICO rely on expenditure patterns or price data for a basket of goods to calculate low-income thresholds. The LIM is a relative measure of low income that uses a low-income threshold established at half of the median Canadian household income. Albeit a low-income measure, the LIM is not Canada’s Official Poverty Line and statistics based on this methodology should not be interpreted as poverty rates.

These three measures are calculated for the whole Canadian population, with the exception of those living in collective dwellings and those living in the territories and on reserve.^Note  Since expenditure and price data are not collected in the territories and on reserve, it is not currently possible to calculate low-income thresholds and low-income rates using the MBM and the LICO for these areas and for Inuit Nunangat^Note  as a whole. However, efforts are currently being undertaken by Statistics Canada to collect the data necessary to allow for the calculation of the MBM in the territories (Gustajtis, Lam and McDermott, 2021).

Calculations for the LIM have typically also excluded those living in the territories and on reserve. The historical justification for this has been that substantial in-kind transfers (such as subsidized housing) and economic activities based on sharing and consumption from own production (such as from hunting, fishing and farming)^Note  could make interpretation of the measurements difficult for those living in the territories and on reserve.  Therefore, Statistics Canada has not published in standard products low-income statistics for these populations. Low-income rates for the Indigenous population^Note Note  as a whole have not been calculated either, because a substantial percentage of the Indigenous population lives in the territories or on reserve.

Researchers such as MacDonald and Wilson (2016) have produced estimates of low income on reserve with census data using the LIM concept. Likewise, Heisz (2019) presents data from the 2011 NHS to argue that the LIM can be calculated for the whole Canadian population including the population residing on reserve and in the territories.

This paper is a contribution in the same vein. It presents a descriptive analysis of low income in the territories, on reserve and in Inuit Nunangat. Following the interpretation guidance in Heisz (2019), a companion paper published by Statistics Canada in 2019, the Low-income measure, after tax (LIM-AT) is calculated based on income data for the whole Canadian population from the 2016 Census, including the population residing on reserve and in the territories. This differs from the traditional threshold, which is based on the median income of only those residing off reserve and outside of the territories. The implication for the low-income rate of the population residing on reserve and in the territories is that under the traditional definition, the measure of median household income used to calculate the low-income threshold did not take into account the income of the population residing on reserve and in the territories. In contrast, the LIM-AT threshold used in this paper includes this part of the population in the calculation of median household income.

By including the population residing in the territories and on reserve in the calculation of the LIM-AT, this paper presents data on low income that allows direct comparisons between the whole population including Indigenous and non-Indigenous populations albeit with certain caveats. This paper also provides low-income data that allows a comparison between the total Canadian population and the population residing across three selected geographies: the territories, reserves, and Inuit Nunangat. Finally, low-income data for different sociodemographic groups within these geographies are presented in order to improve our understanding of the distribution of low income among the population residing in these different areas.

In sum, this paper addresses the following questions:

1. How does the low-income rate vary on and off reserve and across reserves, the territories, and Inuit Nunangat?
2. For how many reserves and territorial census subdivisions can estimates of low income be published, after taking into consideration data quality and confidentiality rules?
3. How does the low-income rate vary by Indigenous identity (First Nations, Métis, Inuit, others)?
4. How does it vary by common correlates of low income, including age, sex, household type and highest level of education within Indigenous identity groups?
5. Is the calculation of the Canadian low-income threshold sensitive to the inclusion or exclusion of the population residing on reserve and in the territories?

This last question is investigated in the final part of the results section. It compares low-income rates using the traditional LIM threshold, to the results in this paper using a LIM threshold derived from the income levels of the whole population^Note  of Canada.

Previous work on income statistics among Indigenous people residing on reserve and in the North

Our results contribute to an expanding literature on socioeconomic outcomes for the on-reserve and Indigenous population in Canada. Studies, in the 1990’s, such as Bernier (1997) and George and Kuhn (1994), have noted apparent persisting income gaps found between Indigenous and non-Indigenous populations in Canada. Further research conducted also highlights existing disparities across Indigenous identity groups (First Nations, Métis, Inuit and others), as well as gender gaps earnings within the Indigenous population (Ceceri and Scott, 2006).  None of these studies used low income as their outcome measure because low income was considered to not properly represent the true difference in standard of living that would be attainable at a specific income level.

An analysis of labour market earnings and total income for the 25 to 64 year-old population in the 1996, 2001 and 2006 censuses has found significant gaps between the Indigenous and non-Indigenous population, including at high levels of education (Pendakur and Pendakur, 2013).  This gap was larger for Registered Indians, in comparison to persons with self-reported Aboriginal ancestry or identity, but decreased over time between both groups. Wilson and MacDonald (2010) present similar results using median income, emphasizing that the gap with the non-Indigenous population has only slowly shrunk between the 1996 and 2006 censuses.

Studies using more recent census and National Household Survey (NHS) data show that some gains in median income were made between 2006 and 2011 for the Indigenous population, but that the gap in median income (and employment) between the Indigenous and non-Indigenous population remains, with some variation across Canadian regions (see for example National Aboriginal Economic Development Board, 2015). In addition, Gerber (2014) uses 2001 and 2006 Census data to show that the conditions at the lower end of the income distribution have stagnated or deteriorated within Inuit and First Nations people.  While for First Nations people and Métis (but not Inuit), they show that there is a persisting gender gap in earned income in favour of men despite women possessing higher educational attainment than men.

Producing and interpreting low-income statistics for the population residing in the territories and on reserve

Calculating low-income thresholds and low-income rates for the population residing in the territories, on reserve and in Inuit Nunangat comes with a set of challenges. The absence of data on income-to-expenditure patterns and the prices of a basket of goods and services, global non-response rate (GNR), income question non-response rate, and the incomplete enumeration of reserves must be considered when assessing data quality and interpreting low-income rates for in the territories, on reserve and in Inuit Nunangat. These issues are reviewed here.

The Low-income cut-offs (LICO) and the Market Basket Measure (MBM)

The Low-income cut-offs (LICO) sets low-income thresholds for families of different sizes and residing in areas with different population sizes based on the share of income an average family spent on food, shelter and clothing. The relationship between income and spending was established using the 1992 Family Expenditures Survey (FAMEX), which was not conducted in the territories and on reserve. For that reason, LICO thresholds are said to not be applicable for populations in these geographies.

The Market Basket Measure (MBM) thresholds are set based on the cost of a basket of goods and services representing a basic, or inclusive, standard of living. The costs are calculated for different regions and adjusted to account for family size.^Note  However, the annual income data^Note  were not collected on reserve and in the territories, for which MBM thresholds could be compared against for these regions. As per the Poverty Reduction Strategy, the Canadian Income Survey is currently being expanded in the territories (Statistics Canada, 2021) and efforts are being undertaken to calculate the MBM for those regions (Gustajtis, Lam and McDermott, 2021).

Low-income measure (LIM)

Similarly, low-income statistics based on the Low-income measure (LIM) are not released for the territories and on reserve. However, this measure differs from the two previous ones in that its calculation does not rely on unavailable consumer expenditure patterns (LICO) or prices (MBM). It is calculated as one-half of the median household income for the population, adjusted for household size to account for economies of scale. Therefore, it can be calculated using long-form census or NHS data alone.

The LIM is a relative measure of low income, widely used in international comparisons. As a relative measure, it is often interpreted as a measure of the uneven distribution of opportunities for full participation in society (Heisz, 2019). In other words, low-income families under the Low-income measure, after tax (LIM-AT) can be considered as families excluded from participating in their communities to the same extent as other families with greater resources. It must be stated, however, that the LIM is not Canada’s Official Poverty Line and statistics based on LIM should not be interpreted as poverty rates. Some caveats in its use also remain when applied to the population residing in the territories, on reserve and in Inuit Nunangat. They are discussed in the next sections.

Data source and concepts used

This paper uses data from the 2016 Census to understand low income in Indigenous communities and among Indigenous identity groups. The census of population is the main source of detailed socio-economic statistics for the population residing in the territories and on reserve in Canada.

Indigenous identity in the census is divided into five categories:  First Nations, Métis, Inuit, multiple Indigenous identities and Indigenous identity not included elsewhere. Multiple Indigenous identities includes persons who reported any two or all three Indigenous identities (First Nations, Métis and Inuit) in the census Aboriginal group/identity question. Indigenous identity not included elsewhere includes persons who did not report First Nations, Métis or Inuit in the Aboriginal group/identity question but who did report Registered or Treaty Indian status and/or membership in a First Nation/Indian band in the census questions on those topics.

Please note that this paper did not include an analysis of First Nations people by Registered or Treaty Indian status or by membership in a First Nation/Indian band. Future analysis could consider these important indicators.

Please also note that a person living in an Indigenous community may not identify as being Indigenous. As such, low-income rates for Indigenous communities should not be seen to be reflective of low-income rates for Indigenous peoples, unless Indigenous identity has also been taken into account.

The LIM-AT concept is used in this paper to calculate low-income rates for Canada overall and for different geographic groupings, including the territories, reserves, and Inuit Nunangat. Adjusted after-tax household income is used to calculate LIM thresholds, and households whose after-tax income is below the threshold attributed to their household size are considered to be in low income. All individuals in that household are considered to be in low income. The low-income rate definition in this paper is therefore the percentage of persons living in low-income households.

In all figures and tables presented in this paper, the geography “Canada” includes the total population of Canada: in other words, persons with Indigenous identity and/or living in Indigenous communities are included in the totals. Stated another way, Indigenous people and communities are not excluded from the total for “Canada”.

Data quality for statistics on reserve and in the territories

Heisz (2019) identifies four potential data quality and interpretation issues when using the LIM for the population residing in the territories and on reserve. These issues are presented and discussed below. Users of low-income statistics for the population residing on reserve and in the North based on the LIM should be aware of these potential limitations to their interpretation of the data.

1. The LIM is not based on cost of living estimates, and therefore cannot account for regional differences in the ability of the population above or below the LIM threshold to achieve a certain standard of living. This is a design feature of the LIM, which, on the other hand, makes it a straightforward measure to compute.
2. Statistics Canada’s definition of income does not include the value of the products of hunting, fishing, and gathering or other similar economic activities that could be used for own consumption by the household. It also does not include the value of subsidized housing. These values might be significant in some communities, although the effect of this valuation has not yet been studied, either for Indigenous communities or other communities in Canada.
3. The quality of the measured components of income may differ between the on- and off-reserve populations. For example, some of the income earned on reserve is tax exempt. This source of income is included in Statistics Canada’s income concept. However, the 2016 Census income data relies predominantly on tax data collected by the Canadian Revenue Agency. Not all tax-exempt income has to be declared by tax filers. It might not appear in their T1 forms or in tax slips issued by employers or the government. Therefore, some share of the income of the on-reserve population might go unreported and would not be included in income estimates. Other tax-filing behaviours might lead to similar issues. Records with no or partial incomes are imputed, and it is challenging to measure the impact of tax-exempt or unreported income on differences in low-income statistics on and off reserve.
4. Data quality issues might also emerge from two sources of non-response for the 2016 Census long-form questionnaire. First, there were 14 incompletely enumerated reserves.^Note  This can lead to a non-response bias if individuals residing in incompletely enumerated reserves are different from the rest of the (enumerated) on-reserve population. Second, the global non-response rate (GNR), which includes the household non-response rate in enumerated reserves and the non-response rate to the income question, might lead to similar non-response biases. The GNR represents the percentage of census content to which there was no response. There is a risk of bias if the characteristics of respondents and non-respondents significantly differ. The first type of GNR is accounted for by weighting, and the second by imputation. However, geographic areas with GNR higher than or equal to 50% are suppressed from our results. Since the long-form census was mandatory in 2016, response rates are very high in all provinces and territories.^Note 

One additional issue might emerge from the fact that the median income used to compute the LIM thresholds in the 2016 Census excludes the population residing in the territories and on reserve. This could be problematic if the low-income rates for these geographies were derived using LIM thresholds calculated without their income data. However, this paper calculates LIM thresholds from the median income of the Canadian population residing in private households in the 13 provinces and territories, including those residing on reserve, and derives low-income rates accordingly. The last part of the results section conducts a sensitivity analysis to assess the impact of this decision on different low-income estimates.

Calculating the Low-income measure (LIM) on reserve and in the territories

Low income on reserve and in the territories

Figure 1 presents the percentage of respondents in low income by geography of residence, i.e. Canada overall, provinces, territories, and inside or outside of the territories, reserves or Inuit Nunangat, as well as for each region composing Inuit Nunangat.

The results show geographic variation across Canada. The low-income rate for Canada is 14.4%, similar to the rate of 14.5% obtained when using the LIM calculated only from the population off reserve and excluding the territories.^Note   Almost no difference is found when comparing Canada (excluding the territories) with the territories. However, the aggregate value for the territories is masking important differences between Yukon and the Northwest Territories on one hand, and Nunavut on the other hand, with respectively lower and higher low-income rates than the territories average. The on-reserve population has a low-income rate of 44.0%. In Inuit Nunangat, the low-income rate is 19.6%, with important variations across its regions, with Nunavut at the higher end (22.1%) and Nunavik (13.0%) the Quebec portion of Inuit Nunangat, at the lower end.

Response rate indicators for these geographies are shown in Table A1. Reserves and parts of Inuit Nunangat have a global non-response rate (GNR) between 10% and 20%. For all other geographies, the GNR is below 10%. The income non-response rate (INR) is between 10% and 20% for reserves, Inuit Nunangat, all the territories, and British Columbia, and below 10% for other geographies. No non-response rate is over 20% for the geographic areas presented in Figure 1. However, GNRs and INRs between 10% and 20% are unevenly distributed, which might reflect a potential source of non-response bias. Finally, Table A1 shows that the partially enumerated reserves are concentrated in four provinces (Quebec, Ontario, Alberta and British Columbia). If the characteristics of those reserves differ from those of the enumerated reserves, non-response bias might also occur.

Data table for Figure 1



Data table for Figure 1
Table summary
This table displays the results of Data table for Figure 1 Percentage in low income, by geography (appearing as column headers).

	Percentage in low income, by geography
Canada	14.4
Newfoundland and Labrador	15.3
Prince Edward Island	16.8
Nova Scotia	17.5
New Brunswick	17.3
Quebec	14.5
Ontario	14.4
Manitoba	17.5
Saskatchewan	15.1
Alberta	9.7
British Columbia	15.7
Yukon	10.4
Northwest Territories	11.7
Nunavut	22.1
Canada excluding the territories	14.4
Territories	14.6
Off reserve	14.0
On reserve	44.0
Outside Inuit Nunangat	14.3
Inuit Nunangat	19.6
Nunatsiavut	20.5
Nunavut	22.1
Nunavik	13.0
Inuvialuit region	19.0
Source: Statistics Canada, Census of Population, 2016.

Low-income measure by Indigenous identity

Table 1 shows low-income rates by Indigenous identity for different geographic groupings.^Note  The Indigenous identity concept is based on a variable that classifies respondents according to whether they identified as First Nations, Métis or Inuit in the census Aboriginal group/identity question.^Note 

The low-income rate of the non-Indigenous population is smaller than any Indigenous identity group in all geographies. When considering Canada overall, the gap between the non-Indigenous population and the Indigenous population is smallest between non-Indigenous people and Métis and between non-Indigenous people and people classified as having an Indigenous identity not included elsewhere.

Excluding the Inuit population^Note , for all Indigenous identity groups, residing on reserve is associated with higher low-income rates.^Note  The highest low-income rates are found for First Nations people and Indigenous people with multiple Indigenous identity responses residing on reserve. The gap between these groups and other groups is smaller off reserve.  There is little variation across geographies for the Inuit population.



The results show evidence of a gap in the LIM-AT between different groups of the population. Table 1 reveals a large gap in the territories and in Inuit Nunangat between non-Indigenous and Indigenous people, especially Inuit (who form the large majority of Indigenous people in these geographic areas). In the territories, 25.0% of Inuit are in low income compared to 5.6% of non-Indigenous people. In Inuit Nunangat, 22.5% of Inuit and 3.1% of non-Indigenous people are in low income.  LIM-AT does not take into account costs of living, which are substantially higher in the North compared to the rest of Canada.  It is therefore possible that cost of living differences between the North and the rest of Canada make the comparison between those two areas more challenging.  It does not, however, mask differences across Indigenous and non-Indigenous people in these areas.

Low-income measure in metropolitan and rural areas

Employment opportunities are distributed unevenly geographically. Large urban centers offer a greater quantity of jobs. Smaller communities are likely to be more affected by the departure of a single large employer, and there might exist a skill mismatch between what local industries demand and the skills that residents possess. Table A4 shows that Indigenous people in Canada predominantly live outside a metropolitan influenced zone (MIZ). Approximately 50% of the Canadian population residing outside of MIZ are Indigenous people. Most of these people are First Nations people. In Inuit Nunangat and in the territories, those residing outside of a MIZ are predominantly Inuit.

The concept of MIZ refers to the census metropolitan area (CMA), census agglomeration (CA), or non-CMA/CA of current residence (on May 10, 2016), as well as the degree of CMA/CA influence of the place of residence of respondents who are living in non-CMA/CA. The degree of influence is determined by the share of the employed labour force in a given CSD outside CMA/CAs who commutes to work in one or more of the municipalities (CSDs) that are part of the delineation core of a CMA/CA.^Note  An adapted version of the concept applies to the territories, which are divided in two types of zones: census agglomerations (CAs) and non-CAs.

Table 2^Note  therefore presents low-income rates in different MIZ and for selected Indigenous identities.^Note  It shows that for non-Indigenous identity, the MIZ status of the CSD of residence is only weakly associated with low-income rates, going from 12.1% in strong MIZ to 15.6% in CSDs that are part of no metropolitan influenced zone outside of the territories. For CSDs outside of CAs in the territories, the rate is much lower at 6.6%. The relationship is more visible for Indigenous people. For example, First Nations people living in CMA/CAs or strong MIZ CSDs have low-income rates at least 11 percentage points lower than those living in moderate, low, or no MIZ CSDs. This also means that there is a larger gap between First Nations people and non-Indigenous people outside of CMA/CAs and strong MIZ than inside of these areas.

A strong relationship is also visible between the MIZ status of the CSD of residence and low-income rates for First Nations people living on reserve, suggesting an uneven distribution of opportunities between urban and rural areas. Alternative explanations include the aforementioned economic activities for own consumption, and a possible difference in the sociodemographic composition of reserves in rural and urban areas (age, but also education, which might be due to lower education opportunities in more remote areas that require geographic mobility for postsecondary education).

In the territories the same pattern is found for Inuit between CAs and other areas, with a 15.2 percentage-point difference in the low-income rate between the two areas (there are no MIZ in the territories). Similarly, First Nations people and Métis residing in the territories outside of CAs have a higher low-income rate than those residing in CAs.

In Inuit Nunangat, those classified as residing in weak and no MIZ are those residing in the areas of Inuit Nunangat situated within the borders of the provinces of Quebec and Newfoundland. As shown in Table 1, these areas, especially Nunavik, have smaller low-income rates than Inuit Nunangat overall. These differences are also visible in Table 2, although it is not clear what is driving them. Again, the results highlight the important differences across all MIZ areas of the territories and Inuit Nunangat in the low-income rates of Inuit and non-Indigenous people, even though the overall LIM is low in those areas.



Variation in the low-income rate across census subdivisions

Table 2 shows that the percentage of respondents in low-income households varies geographically. In order to obtain a better picture of regional disparities, low-income rates are calculated separately for each census subdivision (CSD). Note that each reserve is generally attributed a separate CSD though some reserves encompass several CSD codes.^Note 

Among reserve CSDs, CSD-level low-income rates are missing or have been suppressed for 29% of CSDs, for confidentiality or data quality considerations. Data are also missing for the 14 incompletely enumerated reserves. As shown in Table A3 the share of suppressed or missing CSDs is much larger for reserve than non-reserve CSDs, with low-income rates released for 38% and 79% of CSDs respectively. This might lead to biases in the results from CSD-level distributional statistics.

Table 3 shows basic distributional statistics for the total population and separately for CSDs in different geographies.^Note  The percentile values indicate the low-income rate below which a given percentage of CSDs are. The results show that 50% of all CSDs in Canada have a low-income rate below 14.7%, the low-income rate for the median CSD. In contrast, 50% of reserve CSDs have a low-income rate below 46.2%, 50% of CSDs in the territories have a low-income rate below 21.3% and 50% of CSDs in Inuit Nunangat have a low-income rate below 22.1%. The median reserve CSD therefore has a much higher low-income rate that other types of CSDs.

In addition, the other percentile data show the dispersion of the low-income rate across CSDs. The 25^th percentile value shows the value below which 25% of CSDs are found, and the 75^th percentile value shows the value at or above which 25% of the CSDs are found. The interquartile range shows the difference in percentage points between the low-income rate at the 25^th and at the 75^th percentile. These distributional statistics show two results. First, there is a greater disparity in low-income rates across reserve CSDs than across other CSDs. The difference between low-income rate of Canadian and reserve CSDs at the 25^th percentile is 24.6 percentage points, while the difference at the 75^th percentile is 37.2 percentage points. Second, the distributional statistics shows little overlap between the distributions of low-income rates for Canadian CSDs overall and for reserve CSDs. While only 25% of Canadian CSDs have a low-income rate at 21.1% or more, 75% of all reserve CSDs have a low-income rate at 34.8% or above. This suggests that reserves are among the CSDs where the low-income rate is the highest in Canada. A comparison of the Canadian distributional statistics with those for the territories and for Inuit Nunangat leads to similar conclusions, although with gaps of smaller magnitude.

This set of results shows that there exists important disparities in the percentage of respondents in households below the LIM threshold across CSDs. The distribution of low-income rates for reserve CSDs is much more skewed toward higher rates than for all CSDs in general, and the disparity across reserve CSDs is greater than across other types of CSDs. This suggests that it is relevant to go beyond comparisons between the on- and off-reserve populations and to pay attention to disparities between reserves as well.



Low income among different demographics

The next section considers whether demographic characteristics are associated with different prevalence of low income among the population living on reserve, in the territories and in Inuit Nunangat. Note that the LIM is calculated using household income, but low-income statistics report the share of individuals in low-income households. Therefore, the demographic characteristics are those of individual household members.

Sex

Table 4 shows differences between men and women with details on their census family status (married, lone parent, child, or person not in a census family). In the territories, on reserve and in Inuit Nunangat, the percentage of men and women in low-income households is very similar. Gender differences are mostly visible for Canada as a whole.

However, when considering differences by census family status, lone parent mothers have a higher low-income rate than lone parent fathers, in all geographies reported in Table 4. The large majority of lone parents are lone mothers (see Table A5). Men generally have higher low-income rates than women not in a census family, except at the national level.

 Age

Figure 2 focuses on differences across age groups. It plots low-income rates by five-year age groups separately for the Canadian population overall and for the on-reserve population and the population in territories and in Inuit Nunangat, with an additional distinction between First Nations people and non-Indigenous people on reserve, and Inuit and non-Indigenous people in the territories and Inuit Nunangat.^Note 

For First Nations people residing on reserve, the lines follow a U-shaped curve, with children and seniors more likely to be in low income. The low-income rate is highest for children. At 57.9%, the majority of children between 0 and 4 are found in a low-income family. The LIM-AT stands slightly below 50% for young adults in their 20s, and decreases until 40 to 44 years old and then stabilizes until 60 to 64 years old, before falling at 65 to 69 years old. This point-in-time decrease could be associated with eligibility for benefits such as OAS/GIS. The rate returns just below 50% for seniors in their 70s and 80s.

Data table for Figure 2



Data table for Figure 2
Table summary
This table displays the results of Data table for Figure 2 Canada - Total, On reserve - non-Indigenous identity, On reserve - First Nations, Territories - non-Indigenous identity, Territories - Inuit, Inuit Nunangat - non-Indigenous identity and Inuit Nunangat - Inuit, calculated using percent units of measure (appearing as column headers).

	Canada - Total	On reserve - non-Indigenous identity	On reserve - First Nations	Territories - non-Indigenous identity	Territories - Inuit	Inuit Nunangat - non-Indigenous identity	Inuit Nunangat - Inuit
	percent
0 to 4 years	18.3	24.6	57.9	6.1	32.7	3.1	28.6
5 to 9 years	18.2	24.6	54.0	6.1	30.3	5.1	27.0
10 to 14 years	17.1	19.9	49.9	5.6	25.6	0.0	22.8
15 to 19 years	15.9	26.4	47.7	4.6	21.0	8.6	18.6
20 to 24 years	17.3	23.4	47.9	5.5	20.3	3.6	18.0
25 to 29 years	13.7	18.4	48.3	4.0	26.5	3.5	24.1
30 to 34 years	12.8	17.5	47.9	4.1	28.0	1.5	26.1
35 to 39 years	12.7	20.8	43.9	3.5	24.7	3.4	22.4
40 to 44 years	12.2	18.0	41.0	4.0	23.9	2.3	21.0
45 to 49 years	12.1	18.8	40.5	4.9	23.2	3.2	20.3
50 to 54 years	11.8	17.5	41.1	4.2	18.8	2.9	18.2
55 to 59 years	12.6	17.2	41.3	6.5	20.0	3.6	18.8
60 to 64 years	14.4	18.1	43.4	8.2	17.0	2.1	16.5
65 to 69 years	13.1	12.4	37.5	9.0	13.4	4.1	11.4
70 to 74 years	13.6	12.0	41.0	10.6	13.5	11.1	14.0
75 to 79 years	15.0	9.6	43.9	11.4	16.3	33.3	19.0
80 to 84 years	16.2	12.6	46.8	13.0	22.7	Note ...: not applicable	22.6
85 years and over	18.8	17.4	48.6	14.5	18.2	Note ...: not applicable	21.4
... not applicable Source: Statistics Canada, Census of Population, 2016.

For all age groups, the low-income rates of Inuit in the territories are similar to those of Inuit Nunangat.  These two rates are higher than those of non-Indigenous people in these areas, especially among young children. For adults between 25 and 59 years old, the low-income rate is higher than the total for the Canadian population. A decrease in the LIM-AT is also visible for Inuit in territories and Inuit Nunangat around retirement age, and differences become less important after that age. Finally, the low-income rate is also lower for young Inuit adults between 15 and 24 years old.

Household type

In order to better understand the drivers of age and gender differences in low-income rates among people residing on reserve, in the territories and in Inuit Nunangat, Table 5 reports the household LIM-AT of people in households of different types and sizes. As mentioned above, the total after-tax household income is calculated by dividing the sum of the income of all household members by the square root of the number of household members. This allows to capture economies of scales when two or more income earners reside in the same household and are likely to pool their resources. Furthermore, this calculation method can also classify parents with the same level of income but with one or more children below the low-income line compared to similar households without children or compared to parents with less children.

Consistent with the statement above, the low-income rate tends to be lower for couples without children across all geographies. For couples with children and for lone parents,^Note  the percentage of people in households below the low-income threshold increases with household size (or with the increase in the number of children). This is especially visible for couples and lone parents residing on reserve: more than 70% of persons residing on reserve in lone-parent households with 4 or more household members (3 or more children) are in low income. This category represents 6% of the on-reserve population, and 42% of lone parents residing on reserve.

On the other hand, the percentage of persons in multigenerational households^Note  in low income is similar to the percentage of persons in census families with children but no other adults, and lower than lone-parent households. In addition, the percentage in low income does not increase with household size. This is likely due to the presence of several income-receiving adults in multigenerational households. Notably, multigenerational households (like households formed by couples) might allow for the sharing of domestic and care work which can positively impact the employment potential of adults in the household especially when young children are present.

The low-income rate of persons living alone is higher than any other group except for persons in lone-parent households. This pattern is noticeable for Canada overall as well as on reserve, in the territories and in Inuit Nunangat. It might be partly due to the fact that persons living alone do not have another earner to rely on if they face an unemployment shock.

Overall, persons in households where only one adult is present (lone-parent or living alone) are more likely to be in low income, whereas households with several adults are less likely. The difference is most visible for larger household sizes. Table A7 shows that the share of individuals living in multigenerational households is higher in the territories (11.3%), on reserve (22.9%) and in Inuit Nunangat (20.4%) than in Canada overall (6.3%).



Education

A multivariate analysis using 2006 Census data showed that the earnings gap between non-Indigenous people and different Indigenous identity groups is partly explained^Note  by lower educational attainment and other characteristics (Lamb, 2013). The results in Table 6 complete that study by providing low-income rates by educational attainment to determine whether the size of the gap might vary across different levels of education, and might disappear at certain levels of education.

Table 6 presents low-income rates by the highest education level attained. Certificates, diplomas and degrees are classified following the categories of the highest education level variable in the 2016 Census. Results are presented separately for the total population and by Indigenous identity. They are also reported for those residing in the territories, on reserve, and in Inuit Nunangat.

There is a negative association between educational attainment and low income in all groupings, meaning that more educated respondents are less likely to be found in low-income households in all geographies and for all identities. Within Canada overall, disparities in low-income rates across Indigenous identity groups are smaller among those with a Bachelor degree or more. This is also true across geographies. The gap widens at lower levels of educational attainment between the total population and the First Nations population, and individuals with multiple Indigenous identities or an Indigenous identity not included elsewhere. The gap between non-Indigenous people and First Nations people on reserve and between non-Indigenous people and Inuit in the territories or Inuit Nunangat follows similar patterns. Results show the widest gap for those with no diploma or degrees in all cases. This is especially significant given that among First Nations people and Inuit, a large proportion have an education below secondary or equivalent, at 38.2% and 51.8% respectively.^Note  Conversely, a smaller portion of First Nations people or Inuit hold a Bachelor degree or more.



Sensitivity analysis: low-income rates using restricted and all-areas thresholds

The final step in this analysis is to compare the low-income rates obtained using the low-income threshold used in this paper, with the rates obtained using the traditional threshold. As a reminder, the low-income threshold used in this paper is based on the median income of all geographic areas of Canada, including the territories and reserves (the “all-areas” threshold, thereafter). Meanwhile, the traditional threshold is based on the median income of a subset of the population, restricted to those residing off reserve and outside of the territories (the “restricted” threshold, thereafter).

Tables 7 and 8 present the low-income rates computed using the restricted thresholds and the difference with the rates computed using the all-areas threshold. Table 7 also shows the frequency in low-income households for the all-areas threshold and frequency difference with the restricted threshold. The low-income rates for the population residing in the territories, on reserve and in Inuit Nunangat are computed using the restricted thresholds which classify an observation as being in low income if their income is below the low-income threshold. Although the population residing in these geographic areas were not included in the calculation of the thresholds themselves.

These sensitivity checks show that the regional low-income rates are very similar from one definition to another. The low-income rates computed using the all-areas threshold are found in Figure 1. They are compared with the low-income rates computed using the restricted threshold, reported in Table 7 alongside the percentage points difference. The low-income rates calculated using the restricted thresholds are never more than 0.3 percentage points above the low-income rates calculated using the all-areas thresholds, except for Nunatsiavut (the part of Inuit Nunangat located in the Northwest Territories), for which the difference is 0.6 percentage points. This represents a very small number of individuals in all cases. This is not surprising given the relatively small size of the population excluded from the restricted thresholds calculations.

Since the low-income thresholds vary by household size, a similar exercise was conducted for the low-income rate by household type in Table 8. It compares the low-income rates calculated using the restricted threshold with the low-income rates calculated using the all-areas threshold reported in Table 5. Again, only minor differences are found.

Table 9 shows the thresholds – or the cut-off values below which a household is considered to be in low income – for each definition. For a household of four people, the difference is of $186. An after-tax income below $44,266 placed a household of four people in low income under the restricted threshold previously calculated. A household of four people are considered in low income if their after-tax income is below $44,080, according to the all-areas threshold used in this paper.

When assessing the differences in the low-income rates and thresholds presented in this section, the reader should keep in mind that the LIM-AT measure is a relative measure in terms of poverty as it does not take into account differences in the cost of living across regions of the country and in the prevalence of non-monetary economic activities.

  

Conclusion

The Low-income measure, after-tax (LIM-AT) is a relative measure of low income. It is based on the median household income for the population, adjusted for household size to account for economies of scale. The LICO and the MBM rely on price and expenditure data to compute low-income thresholds. These data have not been collected on reserve or in the territories, which prevents the calculation of low-income rates for these geographic areas and for most of Inuit Nunangat using the LICO and the MBM. Efforts are currently being undertaken to allow for the calculation of the MBM for the territories (Gustajtis, Lam and McDermott, 2021).

Calculations for the LIM have also excluded those living in the territories and on reserve because it was not clear that the LIM would reflect accurately the difference in standard of living that the same income level allows to attain across these areas. The presence of substantial in-kind transfers and economic activities based on sharing and consumption from own production are often cited as reasons for this challenge in interpretation. As argued in Heisz (2019), the LIM can be calculated for these areas.

This paper presents initial results for the percentage of the population in low-income households for Canada overall as well as for the population residing in the territories, on reserve and in Inuit Nunangat, which includes Nunavut and part of the Northwest Territories as well as the northern part of Quebec and of Labrador. The selected measure for this paper is the after-tax LIM computed from the household incomes, adjusted for household size, of the whole population of Canada, including those residing on reserve and in the territories.

The results show that the low-income rate for the total Canadian population residing in private households, including the population residing in the territories and on reserve (previously excluded from that calculation) is 14.4%. The percentage of the on-reserve population in low-income households is 44.0%, the highest low-income rate in Canada for our selected geographies (provinces, territories, the on-reserve population and Inuit Nunangat). This paper also calculates the low-income rate in Inuit Nunangat. At 19.6%, the percentage of respondents in low-income households is higher in that region than in any Canadian province (but lower than Nunavut alone). The gap is much smaller between the territories (14.6%) and the total Canadian population.

When comparing the population living in the territories and Inuit Nunangat to their peers outside of these respective areas, the results show evidence of a gap in the LIM-AT between different groups of the population. It is therefore possible that cost of living differences between the North and the rest of Canada, not accounted for in the LIM-AT, make the comparison between those two areas more challenging. It does not, however, mask differences across Indigenous and non-Indigenous people in these areas. Low-income rates computed with provincial- and territorial-specific thresholds could represent a way to take into account the specificities of the North.

When considering geographic variation in the LIM-AT at the CSD level, there is an important variation in the low-income rate across CSDs in different MIZ status. Reserves in moderate or weak MIZ or outside of MIZ have a higher low-income rate than those located in strong MIZ or CMAs/CAs. We also find differences in the territories between CSDs that are CAs and those that are not. In addition, when calculating the low-income rate separately by census subdivision (CSD), our results show large disparities across reserve CSDs. Most reserve CSDs have a low-income rate above other CSDs. The GNR and area suppression rate is higher for reserve CSDs, pointing at potential biases and data quality issues when conducting CSD-level analyses.

The paper also investigates the role of a few different sociodemographic characteristics. Unlike the overall Canadian population, the percentage of men and women in low-income households is very similar for the population residing in the territories, on reserve and in Inuit Nunangat. Differences emerge when considering lone-parents separately. In this case, lone-parent women in the territories and Inuit Nunangat have a low-income rate higher than lone-parent men or than the overall population. For the on-reserve population, around 50% of both men and women lone-parents are in low income.

Other characteristics appear to be the source of greater differences in low-income rates. The percentage of on-reserve First Nations children between 0 and 4 in low-income households is 57.9%. It is also higher for 0 to 4 year-old Inuit children in Inuit Nunangat and the territories than for the total Canadian population. The low-income rate decreases with age, but is also high for young adults and for children in the three groups mentioned in this paragraph.

Across all geographies, the low-income rate tends to be lower for couples without children, and higher for single person households and lone-parent families. The disparity between these household types is greater for the on-reserve population. Persons in households with more than one adult appear less likely to be in low income, and persons in large households, especially those with only parents (or a lone parent) and their children are more likely to be in low income. Accordingly, the high low-income rate for persons in large lone-parent families on reserve is an important driver of the high low-income rate for First Nations children residing on reserve.

More educated Indigenous and non-Indigenous people are less likely to be found in low-income households. Within Canada overall, disparities in low-income rate across Indigenous identities is very small among those with a Bachelor degree or more. This is also true on reserve, in the territories and in Inuit Nunangat. The gap between the non-Indigenous population and most Indigenous identity groups increases at lower levels of education, with the widest gap for those with no diploma or degrees.

Low-income statistics presented in this paper highlight differences in the prevalence of low income between the total population and the population residing in territories, on reserve and in Inuit Nunangat. Descriptive statistics also provide evidence of differences in low-income rates within those geographic groupings associated with regional or sociodemographic characteristics, contributing to identify groups more at risk of being in low income.

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Appendix