Social Policy Trends: Poverty Reduction: Policy Choices or Employment Growth?

This paper asks how Canada achieved a large decline in poverty between 1976 and 2019 and argues that employment growth deserves a more central place in that explanation. Using the Low-Income Cut-Off as a long-run poverty measure, the authors show a strong relationship between the employment rate and the poverty rate over time. Recessions pushed employment down and poverty up, while periods of stronger job growth generally coincided with falling poverty. The point is not that social policy did not matter, but that labour-market performance appears to have been a major driver of long-run poverty reduction.

The paper explicitly leaves room for the impact of policy choices such as larger child benefits and other transfers, especially in the years after 2015. But its broader warning is that governments can undermine poverty reduction if they neglect the conditions that support employment growth. In that sense, the paper reframes anti-poverty strategy as partly an economic-development issue: public policy that expands work opportunities can be as important as direct income supports in lowering poverty rates.