Poverty Measures

What is the Low Income Measure (LIM)?

Statistics Canada Definition

For the purpose of making international comparisons, the low income measure (LIM) is the most commonly used low income measure. The use of the LIM was suggested in 1989 in a discussion paper written by Wolfson, Evans, and the Organisation for Economic Co-operation and Development (OECD)1 which discussed their concerns about the low income cut-offs (LICOs). In simple terms, the LIM is a fixed percentage (50%) of median adjusted household2 income, where "adjusted" indicates that household needs are taken into account. Adjustment for household sizes reflects the fact that a household's needs increase as the number of members increases. Most would agree that a household of six has greater needs than a household of two, although these needs are not necessarily three times as costly.

The LIMs are calculated three times; with market income, before-tax income, and after-tax income using the Survey of Labour and Income Dynamics (SLID). They do not require updating using an inflation index because they are calculated using an annual survey of household income. Unlike the low income cut-offs, which are derived from an expenditure survey and then compared to an income survey, the LIMs are both derived and applied using a single income survey.

How is the LIM calculated?

In order to calculate the LIMs3, first calculate "equivalent household income" for each household by dividing household income by its "adjusted size", that is the square root of the number of persons in the household. Next, assign this adjusted household income to each individual in the population. Then determine the median of this "equivalent household income" over the population of individuals, that is the amount where half of all individuals will be above it and half below. The LIM for a household of one person is 50% of this median "equivalent household income", and the LIMs for other sizes of households are equal to this value multiplied by their "equivalent household size".

As described in the above section on the Historical Revision, the LIMs for 2006 to 2009 have been recalculated (Table A).

1976 - 2020 Low income measure (LIM) thresholds by income source and household size

Low Income Measure 2020

Low-income measures thresholds (LIM‑AT and LIM‑BT) for private households of Canada, 2020

Statistics Canada - Low-income status of a person

Low-income status refers to the income situation of the statistical unit in relation to a specific low-income line in a reference year. Statistical units with income that is below the low-income line are considered to be in low income.

What is the Low Income Cut Off (LICO)?

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What is the Market Basket Measure (MBM)?

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References

^[S-182] Statistics Canada, Census Family Low Income Measure
^[S-183] Statistics Canada, Low Income Status of a private household
^[S-184] WorkStudyVisa.com - Low Income Cut Off in Canada
^[S-185] MayTree - How do we measure poverty
^[S-186] Statistics Canada, Income Research Paper Series, Low Income Lines: What they are and how they are created
^[S-187] Income Research Paper Series, Market Basket Measure Research Paper: Poverty Index