There is less poverty and less inequality in Quebec
by Pierre Fortin
In the Winter/Spring 2009 issue of Inroads, I reported that Quebec and Ontario are just about on a par in standard of living. Quebec’s real income per capita is 92 per cent of Ontario’s. But Quebecers enjoy more free time, much of it by free choice: they work fewer hours per week, fewer weeks per year and fewer years in their careers. Incorporating the value of the increased leisure time together with cash income into an overall estimate of “true” standard of living leads to one basic conclusion: the average standard of living is now about the same in Quebec as in Ontario.
This result comes with a second surprise: among regions of Canada, Quebec is a leader in the fight against poverty and inequality. In this article, I elaborate on this fact and suggest a few explanations.
Poverty versus inequality
Poverty and inequality are not the same thing. Poverty refers to the lack of resources of people who live at or near the bottom of the income scale. The poverty rate is the percentage of the population living below some low-income threshold. A popular choice of threshold is a disposable income level equal to, say, 50 per cent of median disposable household income. The resulting measure of poverty is a relative poverty rate. Whether a household is poor or not is determined by how large its income is relative to the median.
An alternative choice of threshold is a disposable income level equal to the cost of a fixed basket of goods and services thought to be necessary to sustain some minimum standard of living. This time, the poverty threshold does not move up or down with median income, but simply tracks the cost of the fixed minimum basket. Most people would consider a below-the-line income as indicative of absolute poverty. Both relative and absolute poverty rates are useful, depending on exactly what concern is being addressed. In industrial countries, measured poverty rates usually range from 5 to 20 per cent of total population.
Income inequality, on the other hand, refers to how unequally income is distributed among members of society above as well as below the median. A standard measure of income inequality is a decimal called the Gini coefficient. For disposable household income, this takes on values that usually range from 0.20 (very little inequality) to 0.50 (very pronounced inequality). Even though inequality and poverty are different concepts, it is nevertheless true that countries where inequality is greater also usually have greater poverty.