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Abstract
This study attempts to answer the following basic question: why do some lone parents escape low income or never enter spells of low income or social assistance (SA), while others remain in low income or on SA for many years?
The analysis relies on the 1993-98 longitudinal panel of the Survey of Labour and Income Dynamics (SLID). The main focus is lone mothers, since they account for 93% of low income lone parents. Here are the main findings:
Low income
- Lone mothers have the highest incidence of low income of any family type. In 1998, 39% had incomes below the Statistics Canada post-tax income Low Income Cut-Offs (LICO).
- An estimated 55% of low income lone mothers did not work for pay in 1998. In terms of demographics, the most common characteristics of low income lone mothers were:
- not being in a union when the first child was born (60%);
- having a pre-school age child (47%);
- being a student (25%) or being a high school drop-out (28%);
- living in the Atlantic region; and
- being a recent immigrant, aboriginal, or disabled.
- A higher level of education is associated with higher earnings and a lower chance of being in low income. However, a higher level of education is no guarantee of averting low income: 36% of non-student low income lone mothers had a post-secondary certificate or degree in 1998.
- Low income is a dynamic phenomenon. For example, 70% of those who were in low income at some point over the period 1993-97 exited from low income (although some may have re-entered later).
- Two events are most commonly associated with significant exits from low income:
- an increase in own hours of work (82%); and
- a change in family status, by forming a union and/or someone else becoming the main income recipient (48%);
(significant exits means here that they were accompanied by an at least 20% increase in family income).
Social Assistance
- 40% of all lone mothers, or 68% of all low income lone mothers, received social assistance (SA) in 1998 - the highest rate of any type of family.
- Government transfers reduce the low income gap of female SARs from about 90% to about 30%.
- The three most common characteristics of lone mothers on SA were the same as those of all low income lone mothers:
- not in a union when their first child was born (73%);
- not working for pay (54%); and
- presence of pre-school age child (44%).
Low Income and SA Spells
- Most new low income and SA spells are very short: about half of all the low income and SA recipients exit low income and SA respectively after about 2 years.
- However, some lone mothers stay on low income and SA for many years. For example, over the period 1993-98:
- of those who experienced low income (60% of all lone mothers), 21% were in low income in all six years; and
- of those who received SA (58% of lone mothers), 41% received SA in all six years.
- As a result, the average time someone has been in low income or on SA at any given time is at least 3.4 and 4.3 years respectively (simply because the same long term low income and long term SA recipients appear in the statistics for many years)
- The characteristics most closely associated with long low income spells were:
- no change in lone motherhood status;
- presence of pre-school age children;
- being a student or a high school dropout;
- being a recent immigrant, aboriginal or disabled; and
- living in the Atlantic region or Quebec.
- The three strongest factors associated with longer SA spells were:
- no change in lone motherhood status;
- being a recent immigrant, aboriginal or disabled; and
- presence of pre-school age children.
- Interestingly, the level of education did not appear to have an influence on the length of SA spells.
Conclusion
- The results make somewhat of a case for investing more in education. However, this is not conclusive. Many lone mothers who are in low income or SA recipients have a post-secondary certification. Also, a higher level of education does not seem to have any benefits in terms of shortening SA spells.
- The fact that half of new SA recipients exit within the first two years suggest that policies should be well targeted. However, waiting for several years to ascertain who are long term recipients is not the best targeting strategy. Not only is valuable time wasted, but there is evidence that the longer individuals stay on SA, the more difficult it is to exit.
- A better strategy is to keep probing the characteristics of SA recipients that are associated with long spells and develop programs that are targeted to those characteristics. And since lack of paid work or limited attachment to paid work are common factors among the low income and SA recipients, the main focus should be on providing employment services (such as referrals and employment counseling), coupled with a more generous treatment of earnings under SA and wage subsidies to those able to work a significant number of paid hours.
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