Low-income status of private household

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.

Private household refers to a person or group of persons who occupy the same dwelling and do not have a usual place of residence elsewhere in Canada or abroad. The household universe is divided into two sub-universes on the basis of whether the household is occupying a collective dwelling or a private dwelling. The latter is a private household.

Usage

The prevalence of low income is the number or percentage of private households 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 private households is typically measured using two 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 measure, after-tax (LIM-AT)' refers to a fixed percentage (50%) of median adjusted after-tax income of private households. The household after-tax income is adjusted by an equivalence scale to take economies of scale into account. This adjustment for different household sizes reflects the fact that a household's needs increase, but at a decreasing rate, as the number of members increases. March 21, 2016 to current
  • 'Low-income measure, before-tax (LIM-BT)' refers to a fixed percentage (50%) of median adjusted total income of private households. The household total income is adjusted by an equivalence scale to take economies of scale into account. This adjustment for different household sizes reflects the fact that a household's needs increase, but at a decreasing rate, as the number of members increases. 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 private household March 21, 2016 to current

    This is the current standard.

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