Low Income (Poverty) Dynamics in Canada: Entry, Exit, Spell Durations, and Total Time - June 2000

5. Modelling Entry to and Exit from Poverty

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5.1 Introduction to the Models

In this section, the entry into and exit from low income are analysed in an econometric framework which allows us to identify the effects of various personal characteristics and situational influences, including the important family status effects, on these dynamics. Models are presented separately for males and females of each (initial) family status, thus allowing the model's structure to vary along these dimensions. (See the box for further description of the models.)

For each model, the results are presented in the conventional manner in the appendix, thus including the coefficient estimates and their standard errors and indications of which parameter estimates are "statistically significant" (i.e., significantly different from 0 at the .05 and .01 confidence levels by two-tailed t-tests). The related probability effects shown here are calculated by first fitting a baseline probability for the transition in question for each equation which represents the predicted probability when each of the regressors (all of which are categorical variables) are set to the omitted categories. The probabilities are then re-calculated with each of the regressors "turned on" one at a time, thus yielding the resulting changes in the estimated probability of the transition in question.

5.2 The Annual Entry Models

5.2.1 The Baseline Probabilities

Table 8a shows the probability effects for the models of the probability of entering low income in a given year ? estimated for those currently out of poverty. The baseline probabilities shown in the first row essentially represent the average rate of entering low income for those individuals who did not change family status over the period in question and who possess the other omitted/reference characteristics associated with the regressors included in the models: the presence of one child (in the case of the family types involving children), age 40-49, and an English speaking resident of Ontario (a relatively low-poverty province) living in a large urban area who did not move to another province over the relevant two-year period. The baseline results also pertain most directly to the 1992-93 period, as the calendar year dummy variables allow for general shifts in the probability of entering low income over the other years covered in the data.

The baseline probabilities line up quite well ? as they should ? with the simple annual entry rates shown in Table 2 (where changes in family status are considered) for those individuals who did not change family status from one year to the next.¹³ Thus, after controlling for the other variables included in the models, lone parents (who remain in that state from one year to the next) generally have the highest probability of entering low income from one year to another, with rates of around 8 percent for males and females alike; singles come next, with rates in the 6 percent range; while the predicted probabilities of attached individuals entering low income on a year over year basis are around the 2 percent mark.

Table 8a: Probability Effects for the Annual Entry Models (%)

	Men				Women
	Single	Attached with Children	Attached no Children	Lone Parent	Single	Attached with Children	Attached no Children	Lone Parent
Base Line Probability	6.37**	2.41**	1.85**	7.84**	5.80**	2.88**	1.69**	8.23**
Family Dynamics
to Single	N/A	4.71**	4.51**	-3.93**	N/A	13.86**	11.12**	-3.01**
to Attached with Children	0.09	N/A	2.31**	-1.93**	1.92**	N/A	2.75**	-5.03**
to Attached no Children	-2.41**	-0.69**	N/A	-3.48**	-1.80**	-1.03**	N/A	-5.70**
to Lone Parent	8.96**	6.94**	9.66**	N/A	24.61**	31.89**	42.42**	N/A
to Filing Child	-4.58**	-0.60	0.69	-4.99	-4.14**	~~	2.28**	-4.33
New Spouse	N/A	7.05**	4.10**	N/A	N/A	16.41**	8.61**	N/A
Number of Children (One)
Two	N/A	-0.12**	N/A	0.41	N/A	0.05	N/A	0.52**
Three	N/A	0.61**	N/A	0.82	N/A	0.77**	N/A	2.93**
Four	N/A	1.58**	N/A	0.42	N/A	1.94**	N/A	6.32**
Five or more	N/A	3.20**	N/A	3.51	N/A	3.66**	N/A	9.26**
Minority Language (ENG/FR)
English-Quebec	0.73**	1.00**	-0.03	5.82**	-0.10	1.42**	0.05	1.59**
French-ROC	-1.24**	-0.47**	0.32**	0.41	-0.21	-0.39**	0.18	-0.49
Age Group (Prime)
20-29	0.64**	2.51**	-0.07	6.91**	0.14	3.26**	-0.13**	13.74**
30-39	-0.13	0.62**	-0.12*	2.20**	-1.19**	0.97**	-0.20**	3.79**
50-59	1.36**	0.57**	0.53**	-0.06	1.44**	0.68**	0.37**	2.11**
60-69	-1.12**	2.58**	0.73**	7.56**	-0.97**	2.34**	-0.52**	10.39**
70+	-3.29**	1.70**	-0.10*	-1.55	-2.07**	-0.16	-1.07**	8.23**
Province (Ont.)
NFLD	4.19**	2.04**	2.00**	1.65	3.20**	~~	1.80**	-1.15*
PEI	0.82	-0.35*	0.52**	-1.13	0.38	-0.48**	0.03	-2.82**
NS	1.27**	0.32**	0.76**	1.90	0.96**	0.02	0.66**	-1.85**
NB	0.79**	-0.05	0.34**	-0.73	1.03**	-0.22**	0.38**	-3.21**
QUE	0.13	-0.07	0.71**	-2.65**	1.46**	-0.46**	0.48**	-3.56**
MAN	0.36	-0.01	0.06	-2.24*	-0.09	-0.27**	0.13	-3.08**
SASK	0.48	0.50**	0.72**	-0.86	1.24**	0.08	0.61**	-3.66**
ALTA	-0.15	0.19**	0.42**	-1.29*	1.18**	0.09	0.43**	-2.39**
BC	-0.23	0.34**	0.50**	-0.06	0.74**	0.35**	0.73**	-1.87**
Mover	5.01**	2.30*	1.49**	9.48**	6.75**	3.22**	1.41**	13.10**
Area Size (500,000+)
100,000-499,999	-0.59**	-0.55**	-0.34**	-0.99	-0.18	-0.44**	-0.30**	0.39
30,000-99,999	0.16	-0.12**	0.09*	-0.06	0.61**	-0.21**	0.04	1.11**
15,000-29,999	-0.44	-0.33**	0.14	-2.04*	0.59*	-0.21*	-0.06	1.66**
0-14,999	0.72**	0.30**	0.80**	-0.90	1.76**	0.38**	0.52**	2.08**
Rural Area	2.73**	1.92**	1.78**	3.06**	3.94**	1.85**	1.51**	4.62**
Year (1992)
1993	-0.45**	-0.14**	-0.10**	1.84**	-0.92**	-0.01	-0.04	0.42
1994	-0.08	0.17**	-0.36**	3.22**	-1.16**	0.34**	-0.06	4.29**
1995	-0.18	-0.01	-0.27**	3.10**	-1.02**	0.21**	-0.03	2.96**
* Significance at the .05 level ** Significance at the .01 level ~~ The coefficient had to be suppressed to alleviate convergence problems.

5.2.2 Changes in Family Status

The most dramatic results are, not surprisingly, those pertaining to changes in family status, with the effects of becoming a lone parent the greatest amongst these, especially for women. More specifically, becoming a single parent (see the "to Lone Parent" row in the table) increases the predicted probability of entering low income from 5.8 percent to 30.4 percent for women who were initially single (i.e., the baseline 5.8 percent plus the extra 24.6 percent indicated for that transition), from 2.9 to 34.8 percent for those who were originally attached and who had children, and from 1.7 to 44.1 percent for those who were initially in couples with no children. Conversely (but consistently), a change in family status from lone parenthood to any other category (read down the "Lone Parent" column which represents the model results for those who were initially lone parents) decreases the probability of moving into low income.

Having a spouse is thus seen to be the thread by which many women remain out of poverty ?revealed here in a much more direct and precise manner than previous static analyses which look only at current marital status and current poverty status. For men, the effects of becoming a single parent on the probability of moving into low income from one year to the next are also all statistically significant, and substantial, but much smaller than for females.

Becoming single (see the "to Single" row) also increases the probability of entering low income in most cases, especially for women. The greatest effect here is for those initially attached with children, for whom the probability of entering low income rises from 2.9 percent to 16.8 percent. The exception to the "to single" rule is where the individual (male or female) was already a lone parent (mentioned above) ? and was thus moving from a very high risk state (lone motherhood) to one generally not quite as bad (single).

The birth of a first child (i.e., the "to Attached with Children" set of effects) has a moderately small influence in absolute terms on the probability of entering low income for both individuals who were initially single (who thus also married over the period in question) and those who were initially members of childless couples. For the latter case, though, the probability of entering low income is more than twice as likely as for the baseline "no Children" group (1.9 versus 4.2 percent in the case of men, and 1.7 versus 4.5 percent in the case of women): that is, having a first child more than doubles the probability of entering poverty for couples. This event is, furthermore, a relatively common one, meaning that the overall effect of starting a family on entry into low income is significant in terms of the absolute numbers involved.¹⁴

Moving from any other family status to being attached with no children is uniformly associated with declines in the probability of entering low income in a given year, reflecting the fact that this is the group with the lowest of all poverty rates (in terms of both the levels of poverty rates in any given year and entry rates) ? for men and women alike.

Moving back into the parental home ("to Filing Child") generally appears to represent a form of economic refuge, with this dynamic associated with significant declines in the probability of entering low income for singles and lone parents (although not significantly so for the latter).

Interestingly, being married in both periods but changing spouses over the relevant interval ("New Spouse") is associated with considerably higher rates of entering low income than remaining with the same partner, especially when children are present, with these effects being approximately twice as strong for females as males (e.g., a probability of 19.3 percent as compared to the 2.9 percent for the baseline (same spouse) group.) This result seems counter to any notion that individuals typically change spouses at least partly for economic reasons ? but see the exit rates below on this as well.

The effects of the number of children in the household (for the relevant individuals) are generally (but not uniformly) monotonically positive, but although most are statistically significant, they are not particularly strong (except for very large families). The exception is the case of single mothers, for whom the effects of each additional child are all rather substantial ? a result which does not, interestingly, hold for single fathers.

5.2.3 Age Effects

The differences in entry rates by age are mostly statistically significant but fairly small ? especially compared to the family status effects just seen. It is, however, interesting to note the substantially higher rates of entry for the youngest age group (age 20-29) for individuals with children, these effects being especially strong for single mothers, for whom the estimated entry rates are almost three times those of the baseline ("prime") group: 21.9 percent versus 8.2 percent. The proportional effects are almost as strong for couples with children, but from much lower baseline probabilities, with the youngest group having a predicted rate of 4.9 percent rather than 2.4 percent in the case of males, and 6.2 versus 2.9 percent in the case of females. These results have potential policy implications, especially in a context where there is evidence of significant duration and occurrence dependence (reported below), since the high rates of entry amongst the younger groups might have enduring influences on these individuals' low income experiences for many years to come.

5.2.4 Province, Language, and Area Size Effects

The province effects are mostly quite small (Newfoundland is an exception), except in the case of single parents. The results for this group are, however, somewhat surprising. For lone mothers, in particular, the coefficient estimates are uniformly significantly negative, meaning that holding other factors constant, the rates of entry into poverty are higher in Ontario, the omitted category against which the other province effects compare. This finding would seem to indicate that the social assistance system in Ontario ? the wealthiest province ? has been significantly less effective at preventing single mothers from falling into poverty than has been the case in other jurisdictions.¹⁵

The estimated minority language effects are mostly rather small, although the generally higher entry rates for anglophones in Quebec are noteworthy.¹⁶

Moving from one province to another ("Mover") is fairly strongly associated with entry into low income for individuals of most family types, and for especially lone parents. This is an especially interesting finding ? and to some degree puzzling ? in the context of other work by this author which has found generally strongly positive effects of moving on individuals' earnings, at least for men, as well as the corresponding exit effects reported below. On the other hand, there are a number of possible explanations for these different effects, and the direction of causality might also be suspect here, with individuals who come up against difficult economic circumstances in a given year perhaps being more likely to move as a result of their difficulties.¹⁷

Regarding area size of residence, the clearest results are that individuals in rural areas have distinctly higher probabilities of entering poverty in a given year and that there is a fairly strong and more general inverse relationship between area size and the probability of entering low income for lone mothers, perhaps reflecting a reduced availability of the special sort of services, programmes, and labour market institutions which are most geared to this group in smaller cities, towns, and the countryside.

5.2.5 Calendar Year Effects

The only substantial calendar year effects point to a significant increase in the rate of entering poverty over the period covered by the analysis for lone parents ? despite the fact that it was a period of economic recovery, albeit a rather sluggish and uneven one out through 1996 (the last year covered by the data). This deterioration presumably reflects the degree to which single parents are largely disconnected from the labour market and the decreases in social assistance payments, unemployment insurance, and other government services and transfers (upon which these families are so dependent) which were implemented over this period.

These time trends ? even though they are estimated over a fairly short period ? are in some cases fairly substantial and potentially of long-term consequence. For example, the predicted rate of entry into low income for single mothers rose from 8.2 percent for the baseline 1992-93 transitions to 12.5 percent and 11.2 percent for the 1994-95 and 1995-96 intervals respectively. If this represents a longer-term shift or if the trend has risen even further still ? which seems very possible in the face of continued spending cuts ? higher poverty rates should be expected in the future as these extra entrants join the stock of the current low income population at faster rates than before. (Note the advantage of looking at entry rates rather than overall rates in this respect.)

5.3 The Annual Exit Models

5.3.1 The Baseline Probabilities

Table 8b shows the results for the annual exit models. The baseline probabilities represent individuals with the same characteristics as those in the entry models: no change in family status over the period, one child (where relevant), age 40-49, English speaking resident of Ontario living in a large urban area who did not move to another province, and the 1992-93 calendar year period. These again line up quite well with the simple transition rates seen earlier (Table 2): controlling for other factors, annual exit rates are highest for attached individuals and lowest for singles and lone parents.

5.3.2 Family Status

The initial focus is once again on the family status effects, and the strongest and most important of these once more pertain to lone mothers. For those initially in this status (see the relevant column), any change in family status is associated with a large increase in the probability of exiting poverty (relative to the omitted group representing those who remain single mothers). Becoming attached with children (i.e., marrying) increases the predicted exit rate from 29.3 to 84.1 percent, the increase is even greater for those who become attached but no longer have children, the effect is stronger yet still for those who become a filing child ("moving back home"), and remains quite significant for those who become completely on their own (i.e., no partner and no children). The effects for single fathers are of the same general type, but not as strong (except for the very small group who became filing children).

On the other side of this particular family status dynamic, becoming a lone parent (see the "to Lone Parent" row effects for the other family status models) is associated with strongly negative effects on the probability of exiting low income (except for a statistically non-significant effect for males who were originally in childless couples ? a rare dynamic). For women, the expected probabilities of exiting low income are generally lower for those who moved from some other status to become lone mothers than they are for those who were lone mothers to start with, again indicating that the precise point of entry into lone motherhood generally represents a particularly difficult period ? a sharp cusp point ? for women.

Similar effects to those for lone parents hold for individuals who were single in the initial year, for whom becoming attached (with or without children) or becoming a filing child is strongly associated with exiting low income. The effects are again stronger for females than males except for the filing child case. These results reflect the fact that such individuals are moving from a family status for which poverty rates are generally high (single) to ones where it is much lower.

One important difference for the single status relative to lone parenthood, however, is that becoming single (for those who are already poor) has positive effects on the probability of leaving low income, especially for men. The exit rate is, for example, 27.7 percent for men in childless couples who remain in that state but 43.8 percent for those who become single (i.e., those who leave the relationship), while the analogous rates are 36.5 and 47.7 percent for those initially in couples with children. In short, leaving a relationship appears to be one route out of poverty, especially for men, but also for women.¹⁸

Table 8b: Probability Effects for the Annual Exit Models (%)

	Men				Women
	Single	Attached with Children	Attached no Children	Lone Parent	Single	Attached with Children	Attached no Children	Lone Parent
Base Line Probability	18.92**	36.53**	27.67**	28.41**	20.07**	39.77**	40.50**	29.30**
Family Dynamics
to Single	N/A	11.16**	16.09**	23.83**	N/A	4.79	4.06**	27.10**
to Attached with Children	26.69**	N/A	-5.18**	32.56**	46.76**	N/A	-5.69**	54.79**
to Attached no Children	40.83**	13.40**	N/A	35.99**	57.99**	9.92**	N/A	57.67**
to Lone Parent	1.24	-2.20	4.96	N/A	-8.04**	-19.40**	-26.94**	N/A
to Filing Child	63.11**	49.89**	49.81**	64.81**	67.65**	~~	38.78**	63.64**
New Spouse	N/A	6.73*	43.34**	N/A	N/A	13.73**	34.30**	N/A
Number of Child (One)
Two	N/A	1.35**	N/A	2.33	N/A	1.07**	N/A	-0.49
Three	N/A	-0.25	N/A	2.91	N/A	-2.21**	N/A	-3.93**
Four	N/A	-3.02**	N/A	1.43	N/A	-6.20**	N/A	-7.50**
Five or more	N/A	-8.89**	N/A	-12.12*	N/A	-10.90**	N/A	-9.98**
Minority Language (ENG/FR)
English-Quebec	1.72*	-6.78**	-0.59	-5.33	3.10**	-7.04**	-1.45	-2.60*
French-ROC	-3.33**	2.43	-2.20	-4.71	-2.97**	0.92	-4.54	-2.76
Age Group (Prime)
20-29	8.48**	-1.75**	7.71**	-6.53**	7.28**	-6.74**	6.18**	-8.82**
30-39	3.66**	-0.65	2.86**	-3.37**	2.60**	-3.29**	1.51	-3.75**
50-59	-3.39**	-2.47**	-0.23	-5.49**	-1.97**	-3.18**	-2.18**	-3.96**
60-69	8.28**	-2.48*	4.08**	0.06	11.86**	0.64	5.29**	-2.23
70+	9.88**	-1.58**	4.52**	5.81	10.47**	3.83	1.09	7.09*
Province (Ont.)
NFLD	-10.12**	-15.28**	-10.74**	-9.56**	-13.62**	-13.15**	-17.49**	-18.22**
PEI	-3.41*	3.48	0.11	14.25	-11.06**	2.14	-5.87	-8.06**
NS	-7.09**	-8.80**	-7.44**	-8.58**	-11.14**	-8.81**	-9.64**	-16.24**
NB	-7.32**	-10.17**	-6.77**	-7.67**	-11.40**	-9.97**	-9.19**	-15.52**
QUEB	-6.95**	-5.51**	-6.38**	-7.17**	-11.20**	-6.45**	-7.62**	-15.03**
MAN	-7.33**	-9.72**	-4.32**	-16.30**	-7.82**	-8.31**	-0.97	-14.97**
SASK	-3.67**	-6.19**	-2.95**	-9.36**	-1.58**	-5.99**	-3.62**	-14.91**
ALTA	1.62**	-1.86**	0.53	-1.86	2.35**	-1.94**	0.04	-9.80**
BC	-2.36**	-0.11	-1.60**	-5.68**	-6.87**	-0.84	-3.37**	-5.75**
Mover	4.34**	0.72	-1.08	1.26	-0.12	-2.81*	0.00	-7.88**
Area Size (500,000+)
100,000-499,999	0.16	1.86**	2.52**	0.51**	1.84**	2.83**	5.24**	1.30*
30,000-99,999	1.33**	0.33	0.54	-1.54	1.00**	2.37**	5.03**	0.34
15,000-29,999	1.33	-0.52	1.00	-4.82	0.99	-1.17	3.25**	0.79
0-14,999	1.94**	0.28	0.33	-1.75	0.90**	0.30	1.81*	-0.46
Rural Area	0.47	-4.89**	-2.54**	-3.37**	1.59**	-6.19**	0.31	-7.23**
Year (1992)
1993	1.30**	1.54	1.85**	-0.71	2.43**	1.41**	-0.56	-0.50
1994	0.14	-3.00**	19.75**	-6.07**	1.29**	-1.80**	1.07	-5.32**
1995	-1.37**	-2.12**	7.85**	-7.59**	-1.34**	-2.78**	-2.47**	-6.34**
* Significance at the .05 level ** Significance at the .01 level ~~ The coefficient had to be suppressed to alleviate convergence problems.

A change in spouse for those who remain married is also related to much higher probabilities of leaving low income, a result which is especially interesting in a context where spouse-changing was previously seen to be positively related to the entry into low income ? that is, it seems to be a positive influence on both entering and leaving low income. Here, though, it is consistent with the preceding result that ending a relationship to become unattached increases exit rates.

Shifting from being attached with children to being attached with no children has a positive effect on exiting low income, presumably typically representing situations where children are leaving home and the family's income needs are thus diminished.

The effects of the number of children represent the mirror image of those observed for the entry models seen above: exit rates generally decline with the number of children, thus pointing to longer-run poverty amongst larger families. The effects here are, however, typically about as strong for couples as for single parents (which was not the case for the entry models).

5.3.3 Age Effects

Younger singles and childless couples (20-29 and 30-39), family types which are most dependent on earned income and at the point in the life cycle most strongly characterised by upwards earnings mobility (Finnie [1997a-c], Finnie and Gray [1998], Beach and Finnie [1998]), have considerably higher probabilities of exiting low income on an annual basis than do the prime age reference groups (aged 40-49) of these family types. Putting these results together with the higher entry rates for these age groups seen above also points to a generally more volatile situation for these younger individuals ? that is, higher rates of both entry into and exit from low income. Older singles and couples (60-69 and 70+) are, however, also more likely to exit poverty than the middle-aged group, presumably reflecting the effectiveness of public and private pension programmes and other government transfers in helping these groups.

For couples with children and single parents, on the other hand, the younger groups have lower rates of leaving low income than the corresponding prime age groups (and others), presumably reflecting a combination of reduced labour market opportunities and a limited effectiveness of the social assistance and related transfer programmes upon which these groups often depend. Note that young couples with children thus have both higher rates of entering low income (seen above) and lower rates of leaving than do older ones ? more "total" poverty stemming from both sides of the underlying dynamics.

5.3.4 Province, Language, and Area Size Effects

Exit rates across the provinces are, as expected (based on underlying economic performance), mostly significantly lower than for baseline Ontario, with only Alberta showing a more mixed pattern. The magnitudes of the effects are, furthermore, in many cases quite large, with 5 to 10 and even larger percentage point effects shifting the baseline exit rates down by one-quarter, one-third, or even more in some cases (compare the effects to the baseline probabilities in the first row of the table).¹⁹

Moving from one province to another has rather mixed effects, but the strongly positive effect it has on exiting low income for single men is perfectly consistent with related work on the effects of inter-provincial mobility on individuals' earnings, as these are estimated to be greatest of all (also strongly positive) for young single males ? who are also the most likely to move (Finnie [1998a, b]). The strong negative effects of inter-provincial mobility on exiting low income for lone mothers would seem to merit further study ? does, for example, moving tend to drive these women into poverty, or do they move after tumbling into straitened circumstances?²⁰

The majority of the minority language effects are not individually statistically significant, but unattached anglophones in Quebec generally exit poverty at slightly higher rates than their francophone compatriots, perhaps due to their more enhanced sets of options in terms of moving elsewhere (i.e., out of the province). In contrast, anglophone couples with children and lone mothers do worse than the majority francophones, while francophones in the rest of the country do worse than their anglophone neighbours, perhaps reflecting a diminished availability or effectiveness of related services, more limited job market opportunities, various selection processes, or other factors.²¹

The clearest effect with respect to area size of residence effects is that exit rates are in most cases significantly lower in rural areas, the mirror image of the entry rate patterns, and again especially so for lone parents. The underlying factors once again presumably including different labour market structures, the reduced availability of services, social isolation, and so on. For some other groups, though ? couples with and (especially) without children in particular ? exit rates are higher in the smaller urban areas and towns relative to the large urban centres (the omitted category).

5.3.5 Calendar Year Effects

Finally, the calendar year effects point to clear improvements over time for one group of individuals ? attached men with no children ? versus more neutral or negative trends for all others.²² The greatest deterioration is again seen for attached couples with children and, especially, single parents, with the exit rates of the latter group generally falling 5 to 7 percentage points from baseline levels of just under 30 percent for the 1992 reference year ? thus indicating relative decreases in the 20 percent range.

The source of these trends would presumably be the major cut-backs in social assistance, unemployment insurance, and other transfer programmes which were not sufficiently offset by any positive earnings effects associated with the rather soft recovery which characterised the Canadian economy over this period. The net effects of the maintenance of those cuts along with additional reductions on a smaller scale versus the stronger economic recovery render any assessment of how the situation has evolved over the more recent period rather difficult and one which only further empirical analysis will be able to resolve.

• ¹³The relatively small differences between the two sets of findings stem largely from the fact that the regression baseline rates represent the specific groups just mentioned, many of which have lower than average entry rates, thus generally driving the baseline rates somewhat lower than the simple (overall) transition rates which appear in the earlier table.
  Another reason these estimated probabilities do not line up exactly with those of the simple entry rates shown earlier is because the models embody particular functional forms with respect to both the regressors and the underlying stochastic processes, with the resulting predictions necessarily conforming to those forms. In particular, the logit specification represents a specific stochastic distribution (the extreme value formulation) which will fit the data only to an approximation, with any departures from a perfect fit likely to be greater for the stronger effects (as the function fits values which are further away from where the likelihood mass of the model is greatest).
• ¹⁴The effects of the child might be to simply increase the family's measured needs, thus driving adjusted income down, or could include income changes as well, such as those associated with a woman (typically) cutting back on her labour market participation.
• ¹⁵These results do not, however, explicitly identify the separate influences of labour market outcomes and transfers on entry into low income, and potential composition effects might be at play as well ( e.g., perhaps those out of poverty and therefore susceptible to entry in any given year comprise a rather different group in Ontario).
• ¹⁶The language and province variables are defined together such that the Quebec province indicator is constructed so as to actually represent francophones in that province and the "English-Quebec" variable represents the difference in outcomes between that (local) majority and anglophones in that province, while the reverse holds for the other province variables and the "French-ROC" indicator, with the latter thus capturing the differences between anglophones and francophones in a given province. This specification works better than the more traditional use of province and language indicators which mix those two effects together.
• ¹⁷See Finnie [1998a, b] for an analysis of the effects of inter-provincial mobility on individuals' earnings. The results for low income dynamics reported here are not, however, necessarily inconsistent with those earlier findings. In particular, the estimated earnings effects were broken down by province and varied a great deal from one jurisdiction to another, with movements from the largest and wealthiest provinces actually associated with negative effects on earnings in many cases. The earnings analysis also allowed for a period of adjustment after the move, with the effects estimated only after individuals had been in the new province for at least one full year. Finally, individual earnings dynamics are in fact quite a different thing than family low income dynamics ? even as the latter is to some degree obviously related to the former.
• ¹⁸See the author's earlier work on divorce and child support (see references previously) for further discussion of the relevant issues.
• ¹⁹It should also be noted that the lower exit rates in certain provinces might be directly related to the different entry rates to at least some degree (with there perhaps being no "inconsistency" at all in the entry and exit rate patterns), in that the individuals who enter low income in the poorer provinces (where entry rates are ? ceteris paribus ? apparently lower) might be a generally "tougher" group of low income individuals who would therefore be expected to have lower exit rates as well. Such selection/composition effects could be addressed in the sort of more detailed analysis of the inter-provincial patterns which has just been suggested.
• ²⁰The reader is reminded of the very strong positive effects of mobility on entry for single mothers as well: inter-provincial mobility would seem to be a connected set of dynamics for this group.
• ²¹For example, many anglophone couples with children with opportunities in other provinces may tend to leave the province before actually entering low income (or thereafter), leaving a group which is less mobile or otherwise less likely to exit.
• ²²The fact that the one positive effect does not also hold for women suggests it is largely confined to older men, for reasons related to the sample representation discussed earlier.