Trickling Down or Fizzling Out? Economic Performance, Transfers, Inequality and Low Income

Miles Zyblock, Zhengxi Lin and Lin Zhengxi

Analytical Studies Branch Research Paper Series from Statistics Canada, Analytical Studies Branch

Abstract:

The objectives of this paper are to determine the empirical relationships between economic performance, transfers and low income among Canadian families, and to explore whether these relationships have changed over time. Similar recent studies in the US find a weakening in the relationship between economic growth and low income reduction over the past 25 years. Using data from the Survey of Consumer Finances of Statistics Canada, we find that there is a statistically significant negative relationship between economic performance and the incidence of low income among families in Canada for the period from 1973 to 1995. Government transfers are also found to lift families above the low income threshold. These results are robust across different family types and for three different measures of low income.

We also find a weakening in the relationship between improved economic performance and low income reduction for most family types between 1973 and 1995, and for all family types after 1980. This weakening is associated with rising pre-transfer income inequality among families. Increasing inequality has also reduced the negative impact of transfers on low income rates.

Keywords: Employment insurance; social assistance and other transfers; Household; family and personal income; Income; pensions; spending and wealth; Labour; Low income and inequality (search for similar items in EconPapers)
Date: 1997-11-25
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp3e:1997110e

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