Poverty and Child Benefits in Canada Through a Child Material Deprivation Lens

Abstract

This research develops Canada’s first child material deprivation scale, which includes 15 items and distinguishes between four levels of deprivation (none, marginal, moderate and severe). We use this scale to compare child poverty with income before taxes and various other indicators of material well-being. We find that, despite having an income above the poverty line, many households with children experience outcomes associated with material deprivation or at least considerable material challenges. We then explore the implications of this partial overlap between the material deprivation and income distributions in the context of the Canadian Child Benefit (CCB), an income-tested child benefit program that was introduced in 2016 and is widely considered successful in reducing child poverty. Our simulation of targeting performance and program spending shows how the CCB’s near universal coverage and low benefit claw back rates are successful in reaching materially deprived children with still relatively generous benefits at higher incomes while also involving considerable spending on non-deprived children. We conclude that even when income is a practical metric to target income transfers it should not be the only one by which such programs are designed and evaluated.