Research summary: Income mobility among middle-class households

Title of the report: Income mobility among middle-class households

Authors of the report: Marie Connolly and Charles-A. P.-Demontigny

Why this study

This study aims to better understand income mobility among middle-class households. Previous research has shown that households tend to remain stable within this class. Nearly 50% of the Canadian population belongs to the middle class. Yet, our understanding of income mobility within this group remains limited.

What we did

The study used the Longitudinal Administrative Databank (LAD) from 1993 to 2016. Household income was categorized into four categories:

• below middle class
• lower middle class
• upper middle class, and
• above middle class

Income variation is influenced by certain demographic characteristics. These can exert significant pressure on households. The analyses considered income mobility based on:

• age
• gender
• family type, and
• immigration status

Additionally, logistic regressions incorporating a range of characteristics were estimated to predict the likelihood of moving between income categories.

What we found

The results showed that certain factors positively influence income mobility. These factors lead to a higher income category. These include being:

• younger
• a male
• in a couple, and
• in a household where at least 50% of income comes from employment earnings

Conversely, other factors negatively influence income mobility, leading to a lower income category. These include:

• a change in family type, particularly becoming a single parent, and
• an increase in the number of children in the household

When examining income mobility over time, we observed that:

• income mobility is consistent across different periods, and
• within the middle class, income mobility is significant

What it means

The middle class accounts for nearly 50% of the Canadian population. It is important to understand the households that comprise it in order to support them through targeted programs.

The results of this study show that middle-class households exhibit a high income mobility. This mobility occurs either towards a higher or lower income category. It depends on the personal characteristics of the households. Based on various episodes, the data reveals that household income mobility is stable and predictable.

These results have helped to identify groups more vulnerable to income decline. This suggests a targeted approach to support programs aimed at strengthening Canada's middle class.

Contact us

Strategic and Service Policy Branch, Social Policy Directorate, Social Research Division

Email: esdc.nc.sspb.research-recherche.dgpss.cn.edsc@hrsdc-rhdcc.gc.ca