Income Research Paper Series – Research Paper
Low Income Lines, 2013-2014: Update
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Abstract
In order to provide a holographic or complete picture of low income, Statistics Canada implements an approach that uses three complementary low income lines: the Low Income Cut-offs (LICOs), the Low Income Measures (LIMs) and the Market Basket Measure (MBM). While the first two lines were developed by Statistics Canada, the MBM is based on concepts developed by Employment and Social Development Canada. Though these measures differ from one another, they give a generally consistent picture of low income status over time. None of these measures is the best. Each contributes its own perspective and its own strengths to the study of low income, so that cumulatively, the three provide a better understanding of the phenomenon of low income as a whole. These measures are not measures of poverty, but strictly measures of low income.
The LICOs are based on the relationship between the incomes and the consumption patterns of Canadian households as observed in 1992. The LICOs have been very widely used in Canada since the 1970s. On the other hand, the LIM is based solely on the distribution of household income across the Canadian population and is intended as a reference for international comparisons. Statistics Canada has been producing the LIMs since 1991 and they are aligned with the latest international standard. Finally, the MBM defines low income in relation to the cost of a predefined set of goods and services. The price of this “basket” of goods and services takes regional differences in the cost of living into account.
This publication incorporates a detailed description of the methods used to arrive at each of these measurements. It also explains how base years are defined and how LICOs are updated using the Consumer Price Index. Because the LICOs only depend on the annual Consumer Price Index, they can be produced as soon as the CPI is available (January following the reference year). The LIMs and the MBM depend on other survey products that are available much later. Consequently, they can only be produced about 18 months after the end of the reference year. For these reasons, this report contains LICOs up to 2014, but LIMs and MBM up to 2013 only.
This update presents revised LIMs for 2006 to 2011 resulting from the reweighting of data from the Survey of Labour and Income Dynamics (SLID). This reweighting makes it possible to compare results from the Canadian Income Survey (CIS) to earlier years.
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