Measuring off-reserve aboriginal poverty and income inequality in Canada

Abstract

Though there has been substantial research on poverty and inequality in Canada, the issue of Aboriginal poverty and inequality has not yet been examined in a systematic manner. The issue has been discussed, in some cases, as a part of the overall poverty profile, and mostly analysed in a cross-sectional manner. A complete and methodical study of Aboriginal poverty and inequality that allows behaviour of poverty and inequality to be analysed over time remains to be initiated. In order to get a comprehensive comparative picture of Aboriginal income poverty and inequality in Canada, the research measures off-reserve Aboriginal and non-Aboriginal income poverty and inequality for the period 1996-2007 and compares the results for off-reserve Aboriginal and non-Aboriginal population groups. For measurement purposes Statistics Canada’s low income cut-offs are considered as poverty lines. Several commonly known along with some axiomatically correct poverty indices such as Headcount Ratio, Income Gap Ratio, Poverty Gap Index, Foster-Greer-Thorbecke Index, Sen Index and some modifications of the Sen Index such as the Sen-Shorrocks-Thon (SSTO) Index are used. The Gini coefficient is used as the measure of inequality. Both pre-tax and post-tax incomes are considered. Though a substantial decline in off-reserve Aboriginal poverty is recorded by most of the poverty indices by early 2000s, off-reserve Aboriginal poverty remains higher than non-Aboriginal poverty. After the decline, these off-reserve Aboriginal poverty indices remain stable and show some decline from mid-2000s onwards. Income inequality among the non-Aboriginal population remains stable throughout the period whereas off-reserve Aboriginal income inequality shows a slightly increasing trend in the 2000s. According to the breakdown of the SSTO Index, the decline in off-reserve Aboriginal poverty is mainly due to decline in the headcount ratio.