Portraying Rural Canada1 Ray D. Bollman Statistics Canada Sylvie Michaud Statistics Canada Presentation to the Senate Standing Committee on Agriculture and Forestry October 5, 2006

Portraying Rural Canada2 Outline Definitions and measures of “rural” Definitions and measures of “poverty” Incomes Income inequality Low income Communities and low-income l Persistency l Characteristics Farmers Rural Poverty Canada Income level Inequality Low-income Communities Persistency Determinants Farmers Français

Portraying Rural Canada3 Definitions and measures of “rural” Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada4 What is “rural”? For this presentation, we have chosen the “Rural and Small Town” definition “Rural and Small Town” refers to the population outside the commuting zone of centres with a population of 10,000 or more l A CMA (Census Metropolitan Area) has an urban core population of 100,000 or more and includes neighbouring towns and municipalities where 50 percent of more the workforce commutes to the CMA l A CA (Census Agglomeration) has an urban core population of 10,000 to 99,999 and includes neighbouring towns and municipalities where 50 percent of more the workforce commutes to the CMA Thus, the “Rural and Small Town” population lives in a labour market outside of towns of 10,000 or more Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada5 What is “rural”? Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada6 Definitions and measures of poverty Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada7 Measures of poverty in the world No international definition of poverty l Depends on the country l Depends on the theoretical framework (basic needs, capability) l Absolute or relative measure? l Based on income or consumption? Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada8 Millennium Development goals l Extreme poverty $1/day l Poverty $2/day US: Orshansky poverty thresholds l Based on the income after-tax needed to buy a basket of food (multiplied by 3) l the price of the basket is indexed through inflation Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Measures of poverty in the world

Portraying Rural Canada9 Europe: Laeken indicators l Relative low income measure (60% of adjusted income) l Other indicators such as persistence of low- income, long term unemployment UK: 3 indicators l Absolute, relative income and measure of deprivation Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Measures of poverty in the world

Portraying Rural Canada10 Low income measures in Canada Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada11 Do not have an official measure of poverty Two measures by Statistics Canada l Low Income Cut-Offs (LICO) l Low Income Measures (LIM) l One measure currently released by HRSDC : Market Basket Measure (MBM) of low income Low income measures in Canada Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada12 Income level at which a family may be in strained circumstances because they have to spend 20% more of their income on necessities (food, shelter, clothing) 35 cut-offs to represent 7 family sizes and 5 sizes of area of residence Calculated on income before-tax and income after-tax Low Income Cut-Offs (LICOs) Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada13 Low Income Measure (LIM) Relative measure Based on income before and after-tax Threshold based on 50% of adjusted median income l 1 for the first person, 0.4 for the second person, 0.3 for each subsequent person(s) Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada14 Federal/provincial/territorial working group Cost of a basket for a family of 4 l Food, clothing, shelter (2-3 bedroom apartment), transportation (public transit in urban and car in rural) and other l 47 thresholds l Uses a “disposable income” (income after-tax minus social contributions, out-of-pocket medical expenses…) Market Basket Measure (MBM) Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada15 Income levels: rural and urban Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada16 Median incomes in rural and small town areas are about 10,000$ less than in larger urban centres Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Median after-tax income, Families 2+ (constant 2004$s) Note: Larger urban centres = CMAs (Census Metropolitan Areas) and CAs (Census Agglomerations) Rural and small town areas = areas outside CMAs and CAs Source: Statistics Canada, Survey of Labour and Income Dynamics / Survey of Consumer Finances, Custom Tabulation

Portraying Rural Canada17 Income inequality Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada18 Within rural areas, there is relatively less inequality of incomes Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français GINI index of inequality, after-tax income Note: Larger urban centres = CMAs (Census Metropolitan Areas) and CAs (Census Agglomerations) Rural and small town areas = areas outside CMAs and CAs Source: Statistics Canada, Survey of Labour and Income Dynamics / Survey of Consumer Finances, Custom Tabulation

Portraying Rural Canada19 Low income: thresholds, incidence (rates) and gap Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada20 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Note: (1) Rural excludes small communities classified as urban under 10,000 people. Larger urban centres = CMAs (Census Metropolitan Areas) and CAs (Census Agglomerations) Rural and small town areas = areas outside CMAs and CAs. Source: Statistics Canada, Survey of Labour and Income Dynamics / Survey of Consumer Finances, Custom Tabulation. After-tax income (2004) LICOLIM Montreal (family 4)$31,865$28,202 Rural –Saskatchewan (1) (family 4) $20,844$28,202 Toronto (2 adults)$20,512$19,741 Rural BC (2 adults)$13,418$19,741 Thresholds vary significantly with the measure

Portraying Rural Canada21 A lower share of rural and small town individuals reside in families with incomes less than the LICO Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français After-tax LICO, percentage of population below Note: Larger urban centres = CMAs (Census Metropolitan Areas) and CAs (Census Agglomerations) Rural and small town areas = areas outside CMAs and CAs Source: Statistics Canada, Survey of Labour and Income Dynamics / Survey of Consumer Finances, Custom Tabulation

Portraying Rural Canada22 The share of rural and small town individuals with family incomes less than the LIM has declined and converged with that of those in larger urban centres Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français After-tax LIM, percentage of population below Note: Larger urban centres = CMAs (Census Metropolitan Areas) and CAs (Census Agglomerations) Rural and small town areas = areas outside CMAs and CAs Source: Statistics Canada, Survey of Labour and Income Dynamics / Survey of Consumer Finances, Custom Tabulation

Portraying Rural Canada23 The average income gap (LICO after-tax) is smaller in rural and small town areas Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Average income gap, LICO after-tax (constant 2004$s) Note: Larger urban centres = CMAs (Census Metropolitan Areas) and CAs (Census Agglomerations) Rural and small town areas = areas outside CMAs and CAs Source: Statistics Canada, Survey of Labour and Income Dynamics / Survey of Consumer Finances, Custom Tabulation

Portraying Rural Canada24 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Average income gap, LIM after-tax (constant 2004$s) The average income gap (LIM after-tax) is similar in larger urban centres and rural and small town areas Note: Larger urban centres = CMAs (Census Metropolitan Areas) and CAs (Census Agglomerations) Rural and small town areas = areas outside CMAs and CAs Source: Statistics Canada, Survey of Labour and Income Dynamics / Survey of Consumer Finances, Custom Tabulation

Portraying Rural Canada25 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Median incomes are lower in rural areas Income inequality is lower within rural The choice of the measure has an impact on the levels; especially for rural l LICO: rural incidence is LOWER l LIM: rural incidence is slightly higher Highlights

Portraying Rural Canada26 Communities and low income Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada27 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Low income communities We defined a low income community as having 15 percent or more of its inhabitants living in households with income less than LICO

Portraying Rural Canada28 Persistent low income communities Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada29 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français About one third of communities have persistent HIGHER incidence of low income between 1981 and 2001 (LICO measure)

Portraying Rural Canada30 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français In rural non-metro-adjacent regions, 46 percent of the communities had a high persistence of individuals with income below LICO, 1981 to 2001

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Portraying Rural Canada34 Attributes associated with low income Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada35 Stronger and more dynamic labour markets LOWER the community share of individuals living below LICO Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Note: n.s. indicates “ not statistically significant”. Source: Statistics Canada, Census of Population, 2001.

Portraying Rural Canada36 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Rural manufacturing communities tend to have a LOWER incidence of low income Note: n.s. indicates “ not statistically significant”. Source: Statistics Canada, Census of Population, 2001.

Portraying Rural Canada37 A higher share of junior and senior population LOWERS the community share of individuals living below LICO Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Note: n.s. indicates “ not statistically significant”. Source: Statistics Canada, Census of Population, 2001.

Portraying Rural Canada38 More lone parent families means HIGHER share of individuals living below LICO Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Note: n.s. indicates “ not statistically significant”. Source: Statistics Canada, Census of Population, 2001.

Portraying Rural Canada39 More education means LOWER share of individuals living below LICO Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Note: n.s. indicates “ not statistically significant”. Source: Statistics Canada, Census of Population, 2001.

Portraying Rural Canada40 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Note: n.s. indicates “ not statistically significant”. Source: Statistics Canada, Census of Population, Larger communities and communities with a history of persistent disadvantage have a HIGHER share of individuals living below LICO

Portraying Rural Canada41 Farmers Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français

Portraying Rural Canada42 Average Canadian household income in 2000 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Households associated with census-farms with gross revenue of thousand had the lowest average income from all sources in 2000

Portraying Rural Canada43 Percent of Canadians below LICO in 2000 Rural Poverty Canada Income level Inequality Low income Communities Persistency Determinants Farmers Français Households associated with census-farms with gross revenue of thousand were most likely to have income from all sources less than LICO in 2000

Portraying Rural Canada44 Portraying Rural Canada Ray D. Bollman Statistics Canada Sylvie Michaud Statistics Canada Presentation to the Senate Standing Committee on Agriculture and Forestry October 5, 2006 Questions / Discussion