Analysis of Poverty Dynamics in Canada (Working Paper 9)
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Authors
Finnie, Ross
Date
2000-10
Type
working paper
Language
en
Keyword
Poverty , Canada , Dynamics , Empirical analysis , Low Income
Alternative Title
Abstract
While we know much about poverty (or “low income”) in Canada in a static context, our
understanding of the underlying dynamics remains very limited. This is particularly problematic from
a policy perspective and the country has been increasingly left out on an international level in this
regard. The contribution of this paper is to report the results of an empirical analysis of low income
(“poverty”) dynamics in Canada using the recently available “LAD” tax-based database. The paper first
describes the general nature of individuals’ poverty profiles (how many are short-term versus longterm,
etc.)., the breakdown of the poor population in any given year amongst these different types,
and the characterisation of poverty profiles by sex and family type. It then reports the estimation of
various econometric models, starting with a set which specifies entry into and exit from poverty in any
given year as a function of a variety of personal attributes and situational characteristics, including
family status and changes therein, province of residence, inter-provincial mobility, language, area size
of residence and calendar year (to capture trend effects). A set of proper hazard models then adds
duration effects to these specifications to see how exit and re-entry probabilities shift with the
amount of time spent in a poverty spell or after having exited a previous spell. A final set of
specifications then investigates “occurrence dependence” effects by including past poverty spells first
in an entry model and then with respect to the probability of being poor in a given year. Policy
implications are discussed.