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Reforming Old Age Security: Effects and Alternatives

Author

Listed:
  • Nicholas-James Clavet

    (Universite Laval, Quebec)

  • Jean-Yves Duclos

    (Universite Laval, Quebec)

  • Bernard Fortin

    (Universite Laval, Quebec)

  • Steeve Marchand

    (Universite Laval, Quebec)

Abstract

The federal government announced in its 2012 budget its intention to increase the age of eligibility for old age security and the guaranteed income supplement from 65 to 67 years. The increase will be introduced gradually, beginning in 2023. When the policy is fully implemented in 2030, it will increase the net revenues of the federal government by $7.1 billion per year, but reduce net provincial revenues by $638 million (in constant 2014 dollars). Assuming no change in labour and savings behaviour, delaying the date of eligibility will also increase the percentage of individuals aged 65 and 66 years who are in the low-income group, from 6 percent to 17 percent (for an additional 100,000 low-income seniors in this age group), and will be most harmful to low-income seniors and to women. Alternative reforms to old age security could make it possible to achieve net gains for public finances without having such large negative impacts on the low-income rate among seniors.

Suggested Citation

  • Nicholas-James Clavet & Jean-Yves Duclos & Bernard Fortin & Steeve Marchand, 2015. "Reforming Old Age Security: Effects and Alternatives," Canadian Tax Journal, Canadian Tax Foundation, vol. 63(2), pages 357-373.
    • Handle: RePEc:ctf:journl:v:63:y:2015:i:2:p:357-373
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    File URL: https://www.ctf.ca/EN/Publications/CTJ_Contents/2015CTJ2.aspx
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    References listed on IDEAS

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    1. Marike Knoef & Rob Alessie & Adriaan Kalwij, 2013. "Changes in the Income Distribution of the Dutch Elderly between 1989 and 2020: a Dynamic Microsimulation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(3), pages 460-485, September.
    2. Laibson, David I. & Agarwal, Sumit & Driscoll, John C. & Gabaix, Xavier, 2009. "The Age of Reason: Financial Decisions over the Life-Cycle with Implications for Regulation," Scholarly Articles 4554335, Harvard University Department of Economics.
    3. van Sonsbeek, Jan-Maarten, 2010. "Micro simulations on the effects of ageing-related policy measures," Economic Modelling, Elsevier, vol. 27(5), pages 968-979, September.
    4. Nicholas-James Clavet & Jean-Yves Duclos & Bernard Fortin & Steeve Marchand, 2012. "Le Québec, 2004-2030 : une analyse de micro-simulation," CIRANO Project Reports 2012rp-16, CIRANO.
    5. Sumit Agarwal & John C. Driscoll & Xavier Gabaix & David Laibson, 2009. "The Age of Reason: Financial Decisions over the Life Cycle and Implications for Regulation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(2 (Fall)), pages 51-117.
    6. Ramses H. Abul Naga & Christophe Kolodziejczyk & Tobias Müller, 2008. "The Redistributive Impact Of Alternative Income Maintenance Schemes: A Microsimulation Study Using Swiss Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(2), pages 193-219, June.
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    Cited by:

    1. Cathal O'Donoghue & Gijs Dekkers, 2018. "Increasing the Impact of Dynamic Microsimulation Modelling," International Journal of Microsimulation, International Microsimulation Association, vol. 11(1), pages 61-96.

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    More about this item

    Keywords

    Protection; reforms; old age security; poverty; public finance; Canada;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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