A Longitudinal Analysis of Entries Into and Exits from the Canada’s Guaranteed Income Supplement Regime Among Seniors

We focus on one particular pillar of the public retirement income network in Canada, namely receipt outcomes of the Guaranteed Income Supplement (GIS) regime. This empirical analysis is carried out in a dynamic framework. We address the extent to which individuals enter the state of GIS receipt at various ages as well as the extent to which individuals who receive GIS benefits at the earliest age of eligibility subsequently exit the regime. We first measure these transition rates, and then we focus our analysis primarily on the impact of the following three attributes of recipients: changes in marital status, entry cohort, and current age. The econometric equations include both simple transition models of both entries and exits, as well as hazard models of the probability of exiting the GIS regime. Among our many empirical findings is a non-trivial incidence of delayed entry into the regime as well as exit from the regime conditional on prior receipt of benefits. Women who transit from married to single status are more likely to enter, but the opposite finding is discerned for men. The hazard model for the risk of exiting the GIS regime conditioned on the duration of the on-going spell of receipt reveals a sharp pattern of negative duration dependence. The probability of entering the regime, conditioned on the event of not having received the benefit when one is initially eligible, becomes less and less likely as individuals age.