Does the Canada Child Benefit Actually Reduce Child Poverty?

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Does the Canada Child Benefit Actually Reduce Child Poverty?
  • This essay in the ongoing series on the Canada Child Benefit (CCB) focuses on empirically testing the federal government’s claim that the CCB has dramatically reduced child poverty.
  • The principal analysis in this essay relies on Statistics Canada’s SPSD/M simulation model.
  • Using low income cut-offs (LICO), a measure of low-income, there were an estimated 390,600 children (for 2019) in families whose income was below LICO under the old system of the Canada Child Tax Benefit (CCTB) and Universal Child Care Benefit (UCCB). The number of low-income children drops to 299,700 after the CCB was introduced, a difference of 90,900.
  • If the Market Basket Measure (MBM) is used as an indicator of poverty (it is roughly 20 to 30 percent higher than LICO), there were an estimated 987,306 children living in households whose income was below the MBM under the old system of CCTB and UCCB. The num¬ber of (below MBM) children drops to 702,942 under the new CCB, a decline of 248,364. This represents 77.5 percent of the government’s estimated decline in child poverty of 367,000.
  • It’s important to recognize the approximate values of LICO and the MBM. In 2019, for instance, LICO ranged between $27,085 and $41,406 for a family of four while the MBM ranged between $38,239 and $50,055. Neither measure attempts to capture material depriva-tion but are predominately relative measures of poverty.
  • As previous analyses have shown, the targeting of the new CCB to the middle-class rather than those in need results in more families with in¬comes close to the MBM being raised above the “poverty” line whereas fewer families deeper in need (below LICO) were pushed higher by the CCB.
  • Finally, it’s important to reiterate that the costly ($7 billion) expansion that came with the CCB was deliberately targeted towards the middle class and not to truly low-income families with children.

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