Where Is Poverty Greatest in Canada? Comparing Regional Poverty Profile without Poverty Lines: A Stochastic Dominance Approach

Wen-Hao Chen, Statistics Canada

This paper uses an inference-based stochastic dominance approach to compare regional poverty profile in Canada without arbitrarily specifying a poverty line. This analysis is carried out for ten provinces using the Survey of Labour and Income Dynamics for 2000. Robustness of the results is also verified for different choice of spatial price deflators, and equivalence scales. The extent to which the findings are sensitive to the assumption made to poverty concept is also examined. We find that tests of dominance cannot be rejected in all forty-five but one pair-wise comparisons. Dominance results are robust to the choice of equivalence scales, while rank reversal occurs when alternative cost-of-living deflators are used. Switching from an absolute to a relative poverty concept has virtually no effect on poverty rankings for Atlantic Provinces but not in the case for other provinces. Nevertheless, for all scales we find that poverty is greatest in British Columbia.