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Low Income Cut-Offs

The low income cut-offs (LICOs) are a set of household income cut-offs that are widely used as a method of determining low income status. The LICOs are created by Statistics Canada, although it is made quite clear that these are not official poverty lines. There is no official definition of poverty in Canada.[3]

1.

Why do you think this is?

2.

What are the potential policy implications of an official poverty line?

3.

Is using LICOs to define poverty consistent with an absolute, relative or subjective definition of poverty?

 

Statistics Canada’s Before-Tax Low Income Cut-offs for 2002

 

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Statistics Canada
[2]

As you can see, there is not just one LICO, but variable cut-off points that vary by family size and geographic location. Notice the variation in LICOs with increasing family size as well as the differences between LICOs for rural and urban areas. An individual is said to be living in poverty if his or her family income is below the LICO for their family size and location.

The LICOs are not perfect measures of poverty. One significant downside is that poverty is defined in terms of household income, and therefore assumes equal distribution of resources within the household. This may not always be the case, and may underestimate the poverty of women who they live in families in which they are not given equal access to resources.[3] In addition, parents may neglect their own needs in favour of providing for their children.

1.

Can you think of other disadvantages of defining poverty in this way?

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2. National Council of Welfare. Poverty profile 2001. Ottawa, Minister of Public Works and Government Services Canada, 2004.

3. Lochhead, C, Scott, K. The dynamics of women's poverty in Canada. 2000. Ottawa, Canadian Council on Social Development.

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