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

Statistics Canada No. 110

24 Pages Posted: 15 Jun 1998

See all articles by Myles Zyblock

Myles Zyblock

Government of Canada - Demand and Labour Analysis

Zhengxi Lin

Statistics Canada

Date Written: December 10, 1997

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.

JEL Classification: H53

Suggested Citation

Zyblock, Myles and Lin, Zhengxi, Trickling Down or Fizzling Out? Economic Performance, Transfers, Inequality and Low Income (December 10, 1997). Statistics Canada No. 110, Available at SSRN: https://ssrn.com/abstract=96510 or http://dx.doi.org/10.2139/ssrn.96510

Myles Zyblock (Contact Author)

Government of Canada - Demand and Labour Analysis

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Canada
613-951-5132 (Phone)
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Zhengxi Lin

Statistics Canada ( email )

Ottawa, Ontario
Canada
613-951-0830 (Phone)
613-951-5403 (Fax)

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