A homeless man sleeps on a park bench, juxtaposed against middle-class tourists, in Montreal, Canada. 2012.
Using a rich set of data from Statistics Canada, which tracks the “low-income status” (poverty status) of Canadians since 1992, our research examined various indicators such as the length of poverty spells, rates of entry and exit from poverty, and the persistence of low-income status over time. This detailed data allows us to investigate not just the state of poverty but its dynamics — how people enter and exit poverty, and how long they remain impoverished. This Canadian dataset is unique in the world in terms of quality, coverage, and its ability to study the many different aspects of poverty. We then combined it with the Fraser Institute’s Index of Economic Freedom for Canadian provinces, which has components for government transfers to people, taxation burdens, and regulation of labour.
We found that “extremely” persistent poverty (people who remained more than eight years below the poverty) line was strongly associated with low economic freedom. An extra point on the index of economic freedom — which goes from 0 to 10 — caused a half-point reduction in the rate of extremely persistent poverty.
Source: Vincent Geloso, AIER https://www.aier.org/article/only-economic-freedom-pulls-people-out-of-poverty/