Low-income status of economic family

Status: This standard was approved as a departmental standard on March 21, 2016.

Definition

Low-income status refers to the income situation of the statistical unit in relation to a specific low-income line in a reference year. Statistical units with income that is below the low-income line are considered to be in low income.

Economic family refers to a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common-law union, adoption or a foster relationship. A couple may be of opposite or same sex.

By definition, all persons who are members of a census family are also members of an economic family. Examples of the broader concept of economic family include the following: two co-resident census families who are related to one another are considered one economic family; co-resident siblings who are not members of a census family are considered as one economic family; and, nieces or nephews living with aunts or uncles are considered one economic family.

Usage

The prevalence of low income is the number or percentage of economic families in low income.

Beyond the prevalence of low income, various low-income indicators can be derived and used to capture the depth of low income.

The low-income gap measures by how many dollars an income falls below a low-income line. The low-income gap ratio expresses the low-income gap as a proportion of the applicable low-income line.

Statistics such as average and median of the gap and gap ratio provide measures of depth of low income for the low-income population.

For those who are not in low income, the gap and gap ratio would have a value of zero. For those who are in low income with no or negative income, the gap is set to be the amount specified by the applicable low-income line. The gap ratio indicator would thus be equal to 1.

Low-income status for economic families is typically measured using three low-income concepts. For more information on these concepts, refer to the Measurements section.

Conformity to relevant internationally recognized standards

There are no relevant internationally recognized standards.

Measurements

  • 'Low-income cut-offs, after-tax (LICO-AT)' refers to an income threshold, defined using 1992 expenditure data, below which economic families or persons not in economic families would likely have devoted a larger share of their after-tax income than average to the necessities of food, shelter and clothing. More specifically, the thresholds represented income levels at which these families or persons were expected to spend 20 percentage points or more of their after-tax income than average on food, shelter and clothing. These thresholds have been adjusted to current dollars using the all-items Consumer Price Index (CPI). March 21, 2016 to current
  • 'Low-income cut-offs, before-tax (LICO-BT)' refers to an income threshold, defined using 1992 expenditure data, below which economic families or persons not in economic families would likely have devoted a larger share of their total income than average to the necessities of food, shelter and clothing. More specifically, the thresholds represented income levels at which these families or persons were expected to spend 20 percentage points or more of their total income than average on food, shelter and clothing. These thresholds have been adjusted to current dollars using the all-items Consumer Price Index (CPI). March 21, 2016 to current
  • 'Market Basket Measure (MBM)' refers to the measure of low income based on the cost of a specific basket of goods and services representing a modest, basic standard of living developed by Employment and Social Development Canada (ESDC). The threshold represents the costs of specified qualities and quantities of food, clothing, footwear, transportation, a shelter and other expenses for a reference family of two adults and two children. The square root of economic family size is the equivalence scale used to adjust the MBM thresholds for other family sizes. March 21, 2016 to current

Classifications

Additional information

Statistics Canada publishes several low-income lines with which low-income status can be computed. See 'Low Income Lines' and 'Low Income in Canada - A Multi-line and Multi-index Perspective' from the Income Research Paper Series for detailed definitions and discussions of each line.

Since their initial publication, Statistics Canada has clearly and consistently emphasized that low-income lines are not measures of poverty. Rather, low-income lines reflect a consistent and well-defined methodology that identifies those who are substantially worse off than average. These measures have enabled Statistics Canada to report important trends, such as the changing composition of those below the low-income lines over time.

Caution should be used when applying low-income concepts to certain geographic areas or to certain populations. The existence of substantial in-kind transfers (such as subsidized housing, First Nations band housing) and sizeable barter economies or consumption from own production (such as product from hunting, farming or fishing) could make the interpretation of low-income statistics more difficult in these situations.

Relation to previous version

  • Low-income status of economic family March 21, 2016 to current

    This is the current standard.

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