Profiles and Transitions of Groups at Risk of Social Exclusion: Lone Parents - November 2002

6. Longitudinal Profile of Low Income

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6.1 Introduction

Until now we have focussed on the incidence of low income in a single year and we have tried to answer the question: why do some lone mothers experience low income, while others do not? We found that the main cause of low income is insufficient hours of work, rather than low wage rates. We also identified some of the demographic characteristics most closely associated with low income such as: having a pre-school age child; being a student; or not being in a union when the first child was born.

We now turn our attention to the factors that affect the duration of low income. The question we address in this section is: why do some lone low income mothers stay in low income for many years, while others stay in low income only for a short period? The results of this section are based on an analysis of the longitudinal 1993-98 SLID data.

It should be pointed out that the longitudinal SLID analysis is based on a single panel (1993-98), while the cross-sectional analysis is based on the 1998 records of two overlapping panels (1993-98 and 1996-99). As a result, the sample for the longitudinal analysis is roughly half that of the cross-sectional analysis sample and, therefore, the sample size challenges are now more serious than was the case with cross-sectional analysis. (Table 6.1 provides basic sample size information, similar to what was provided for the cross-sectional sample in Table 4.1).

6.2 Longitudinal Incidence of Low Income

First we examine the longitudinal incidence of low income i.e. how many lone mothers' cumulative family income over the entire 1993-98 period was less than the cumulative value of their corresponding after tax LICOs? We examine the incidence of low income by type of family and separately for male and female main income recipients.

The longitudinal results present a similar picture to the cross-sectional results. Lone mothers again have the highest incidence of low income among any type of family 34% or double the rate of any type of family headed by a female (Table 6.1).

The cumulative low income gap of lone mothers before government transfers is 84% (the highest of any type of family); after government transfers and income taxes it drops to 26% (the lowest of any type of family). These results are consistent with those based on the 1998 cross-sectional data.

Table 6.1 also shows that longitudinal analysis of the SLID data presents more challenges. Because of sample size limitations, it was not possible to produce estimates for lone fathers and several other types of families. More detailed tables for all lone parents, lone mothers, and female major income recipients in couples with children are shown in Appendix B. Also, Appendix C presents the results of a logit analysis of the incidence of longitudinal low income (i.e. six-year cumulative income below the six-year cumulative after tax LICOs).

Table 6.1 Longitudinal incidence of low income, 1998, among all major income recipients¹

	Lone parent, kids<18	Unattached individual	Couple without kids<18	Couple with kids<18	Other economic families	All economic families
Male major income recipients
All major income recipients	93,543	1,012,805	1,216,103	2,262,207	279,183	4,863,840
Low income major income recipients²	***	182,051	***	83,307	***	340,001
Incidence of low income	***	18%	***	4%	***	7%
Low income gap before transfers³	***	70%	***	61%	***	66%
Low income gap after transfers	***	38%	***	29%	***	35%
Female major income recipients
All major income recipients	534,988	874,575	426,824	651,926	212,823	2,701,137
Low income major income recipients²	182,545	146,557	***	78,696	***	450,176
Incidence of low income	34%	17%	***	12%	***	17%
Low income gap before transfers³	84%	67%	***	70%	***	75%
Low income gap after transfers	26%	38%	***	29%	***	31%
All major income recipients
All major income recipients	628,531	1,887,380	1,642,927	2,914,133	492,006	7,564,977
low income major income recipients²	208,163	328,608	46,446	162,003	***	790,178
Incidence of low income	33%	17%	3%	6%	***	10%
Low income gap before transfers³	83%	68%	69%	65%	***	71%
Low income gap after transfers	28%	38%	36%	29%	***	32%
Sample size
Male major income recipients
All major income recipients	87	939	1,354	2,850	286	5,516
Low income major income recipients	***	157	***	75	***	276
Female major income recipients
All major income recipients	577	759	459	789	225	2,809
Low income major income recipients	170	116	***	61	***	380
(1) Sample of major income recipients, age 16-55 in 1993. (2) A major income recipient is classified as low income if the cumulative 1993-98 family income was less than the cumulative LICOs (all expressed in 1993 dollars). (3) The low income gap refers to the average low income gap during the years that the family unit was low income. *** Less than 30 observations.

6.3 Duration of Low Income

Over the six-year period 1993-98, 60% of lone mothers experienced at least one year of low income (Table 6.2). This means that low income touches many more lone mothers than indicated by the single-year incidence of low income (39% in 1998) or the cumulative low income rate referred to in Table 6.1 (34%).

We now turn our attention to one of the main focuses of the study: the duration of low income. Table 6.2 presents three basic measures:

• always in low income: one indicator of the duration of low income is what percent of those who were in low income in 1993-98 were in low income in all six years; Table 6.2 shows that 21% of low income lone mothers were in low income in all six years;
• average years in low income: another indicator is the average number of years that were spent in low income over the period 1993-9; among those who were in low income at least once over that period, the average years in low income for lone mothers was 3.6, the highest for any type of family;
• in-progress low income spell: finally, another indicator of the duration of low income is "in-progress" spells; they are estimated by examining the low income spell of everybody who was in low income in 1993; the in-progress low income spells are an indicator of the length of low income spells, although they are an under-estimate of the length of completed spells (since some of them may have started before 1993 or ended after 1998). Table 6.2 shows that the average in-progress low income spell of lone mothers is 3.4 years, close to the average across all types of family.

Table 6.2 Indicators of the duration of low income, 1993-98, among all major income recipients

	Lone parent, kids<18	Unattached individual	Couple without kids<18	Couple with kids<18	Other economic families	All economic families
Male
All major income recipients	93,543	1,012,805	1,216,103	2,262,207	279,183	4,863,840
Low income in at least one year	***	42.1%	9.8%	13.7%	20.5%	19.6%
- percent of low income always low income2	***	21.6%	***	***	***	14.7%
- average years on low income3	***	3.3	2.4	2.5	2.6	2.9
- in-progress low income spell4	***	3.3	***	***	***	3.2
Female
All major income recipients	534,988	874,575	426,824	651,926	212,823	2,701,137
Low income in at least one year	60.0%	42.3%	16.3%	24.9%	28.9%	36.4%
- percent of low income always low income2	20.6%	21.3%	***	***	***	20.0%
- average years on low income3	3.6	3.3	2.4	3.4	2.5	3.3
- in-progress low income spell4	3.4	3.3	***	4.2	***	3.4
Both genders
All major income recipients	628,531	1,887,380	1,642,927	2,914,133	492,006	7,564,977
Low income in at least one year	57.0%	42.2%	11.5%	16.2%	24.2%	25.6%
- percent of low income always low income2	23.2%	21.4%	***	14.1%	***	17.4%
- average years on low income3	3.7	3.3	2.4	2.8	2.6	3.1
- in-progress low income spell4	3.5	3.3	3.0	3.3	2.9	3.3
(1) Sample of major income recipients, age 16-55 in 1993. (2) Percent of those who were low income in at least one year, who were also low income in all six years. (3) Average years in low income of those with at least one year of low income in 1993-98. (4) Average uninterrupted spell of low income of those who were low income in 1993. *** Less than 30 observations.