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Reforming Old Age Security: Effects and Alternatives

Author

Listed:
  • Nicholas-James Clavet
  • Jean-Yves Duclos
  • Bernard Fortin
  • Steeve Marchand

Abstract

The federal government announced in its 2012 budget its intention to delay the age of eligibility for Old Age Security and the Guaranteed Income Supplement from 65 to 67 years. By the time the policy is fully implemented (i.e., in 2030), this delay will have increased net revenues of the federal government by 7.1 billion dollars per year (in constant 2014 dollars), but will reduce net provincial revenues by 638 million dollars. With constant labour and savings behaviour, this delay would also increase the percentage of individuals aged 65 and 66 years who are in the low income group from 6% to 17% (for an additional 100,000 low-income seniors in this age group) and would be most harmful to low-income seniors and to women. Alternative reforms to the Old Age Security could make it possible to achieve similar effects on public finances without having such large 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," CIRANO Working Papers 2015s-11, CIRANO.
    • Handle: RePEc:cir:cirwor:2015s-11
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    File URL: https://cirano.qc.ca/files/publications/2015s-11.pdf
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
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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

    Pensions; population aging; 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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