NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Retirement Income Security and Well-Being in Canada

Michael Baker, Jonathan Gruber, Kevin S. Milligan

NBER Working Paper No. 14667
Issued in January 2009
NBER Program(s):   AG

A large international literature has documented the labor market distortions associated with social security benefits for near-retirees. In this paper, we investigate the 'other side' of social security programs, seeking to document improvements in wellbeing arising from the provision of public pensions. To the extent households adjust their savings and employment behavior to account for enhanced retirement benefits, the positive impact of the benefits may be crowded out. We proceed by using the large variation across birth cohorts in income security entitlements in Canada that arise from reforms to the programs over the past 35 years. This variation allows us to explore the effects of benefits on elderly well-being while controlling for other factors that affect well-being over time and by age. We examine measures of income, consumption, poverty, and happiness. For income, we find large increases in income corresponding to retirement benefit increases, suggesting little crowd out. Consumption also shows increases, although smaller in magnitude than for income. We find larger retirement benefits diminish income poverty rates, but have no discernable impact on consumption poverty measures. This could indicate smoothing of consumption through savings or other mechanisms. Finally, our limited happiness measures show no definitive effect.

download in pdf format
   (167 K)

email paper

A non-technical summary of this paper is available in the 2009 number 1 issue of the NBER Bulletin on Aging and Health. You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (167 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14667

Users who downloaded this paper also downloaded these:
Gruber w6308 Social Security and Retirement in Canada
Boersch-Supan and Juerges w12303 Early Retirement, Social Security and Well-Being in Germany
Baker, Gruber, and Milligan Income Security Programs and Retirement in Canada
Charles w9033 Is Retirement Depressing?: Labor Force Inactivity and Psychological Well-Being in Later Life
Baker, Gruber, and Milligan w9455 Simulating the Response to Reform of Canada's Income Security Programs
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us