Unit Root Tests of Canadian Poverty Measures

Abstract

This note examines the non-stationarity property of a most widely used Canadian poverty measure, low income cut-off, for Canada and for each of its ten provinces using various unit root tests which started gaining popularity since the early 1980s. Most test results indicate that the Canadian poverty rates for the period of 1980 to 2003 are non-stationary. Therefore it is quite reasonable and appropriate to model the Canadian poverty rates as an I(1) process in the empirical studies on poverty issues in Canada.