Low-income intensity during the 1990s: The role of economic growth,
employment earnings and social transfers
by Garnett Picot, René Morissette and John Myles
Business and Labour Market Analysis Division
Analytical Studies Branch research paper series, No. 172
Context
All countries look to economic growth to reduce low income. An increase
in employment and employment earnings associated with economic expansions
is seen as the most effective way of reducing low-income rates. But
for growth to be effective, expansions must generate substantial employment,
families in low-income must share in the employment gains, and the wages
received by families at the bottom of the income distribution must be
sufficient to reduce low-income rates effectively.
Objectives
This study asks the following questions :
- What role did economic growth, employment earnings and governments
transfers play in the patterns of low-income intensity in Canada during
the 1980s and the 1990s?
- Has the relationship between economic growth and low-income intensity
weakened during the 1990s as compared to the 1980s?
Findings
- Low-income intensity was higher in most provinces during the 1990s
than during the 1980s (comparing comparable years in the business
cycle)
- During the 1990s, changes in government transfers did not offset
the drop in employment earnings among lower-income families, as they
did during the 1980s. This led to an increase in low-income intensity
- Whether or not the relationship between economic growth and low-income
intensity weakened in any kind of permanent way during the 1990s as
compared to the 1980s is unclear from this analysis.
Data source: Survey of Consumer Finances and Survey
of Labour and Income Dynamics.
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