Definition and Measurement of Asset Poverty in Canada

23 Pages Posted: 14 Dec 2013  

David W. Rothwell

Oregon State University - School of Social and Behavioral Health Sciences; McGill University - School of Social Work

Robert Haveman

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: December 12, 2013

Abstract

In Canada, poverty policy and discourse focuses on annual estimates of low income. Assuming that assets, independent from income, represent an alternative view of well-being we introduce an asset-based measurement of poverty for Canada based on (1) financial assets and (2) net worth. A household is "asset poor" if it does not own sufficient assets to survive at the low-income cutoff for three months. Data from the 1999 and 2005 cycles of the Survey of Financial Security suggest asset poverty rates were approximately two to four times higher than the corresponding low-income rates. We show for the first time that, proportionately, households with female lone parents, renters and younger persons were overrepresented among the asset poor. We demonstrate that 14% of Canadians were joint low income and financial asset poor in 2005. The relatively high asset poverty rates suggests a need for anti-poverty policies to better promote financial security.

Keywords: poverty, assets, wealth, asset poverty, Canada

JEL Classification: I32, D14, D31

Suggested Citation

Rothwell, David W. and Haveman, Robert, Definition and Measurement of Asset Poverty in Canada (December 12, 2013). Available at SSRN: https://ssrn.com/abstract=2367057 or http://dx.doi.org/10.2139/ssrn.2367057

David W. Rothwell (Contact Author)

Oregon State University - School of Social and Behavioral Health Sciences ( email )

Corvallis, OR
United States

HOME PAGE: http://health.oregonstate.edu/people/rothwell-david

McGill University - School of Social Work ( email )

3506 University Street, Suite 300
Montreal, Quebec
Canada

HOME PAGE: http://www.mcgill.ca/socialdevelopment

Robert H. Haveman

University of Wisconsin - Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-263-7398 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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