Income Security Programs and Retirement in Canada

Michael Baker, Jonathan Gruber and Kevin Milligan

in Social Security Programs and Retirement around the World

Published by University of Chicago Press

Published in print March 2004 | ISBN: 9780226310183
Published online February 2013 | e-ISBN: 9780226309989 | DOI:
Income Security Programs and Retirement in Canada

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This chapter aims to model the entire income security (IS) system in a unified framework. The key to the approach used is the building of a comprehensive data set (based on the Statistics Canada Longitudinal Worker File) that has information for a very large sample of older Canadians on their earnings histories, work decisions, marital status and spousal characteristics, and the characteristics of their jobs. These data are employed to construct a simulation model that incorporates the incentives for retirement under the various programs of the Canadian public IS system: the CPP/QPP; the Old Age Security (OAS) system comprising the basic OAS benefit; the Guaranteed Income Supplement; and the Spouse Allowance. There are two findings of importance. First, for the typical worker, the public IS system provides increasingly strong disincentives to work after age sixty. Second, there is a significant impact of these disincentives on work decisions. Using both one-year and more forward-looking measures, it is estimated that workers with larger returns to additional work are less likely to leave the labor force.

Keywords: income security system; retirement; Old Age Security; Guaranteed Income Supplement; Spouse Allowance

Chapter.  17851 words.  Illustrated.

Subjects: International Economics

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