TY  - JOUR
AU  - Baker,Michael
AU  - Gruber,Jonathan
AU  - Milligan,Kevin
TI  - Simulating the Response to Reform of Canada's Income Security Programs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9455
PY  - 2003
Y2  - January 2003
UR  - http://www.nber.org/papers/w9455
L1  - http://www.nber.org/papers/w9455.pdf
N1  - Author contact info:
Michael Baker
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/978-4138
Fax: 416/978-6713
E-Mail: baker@chass.utoronto.ca

Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu

Kevin S. Milligan
Department of Economics
University of British Columbia
#997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-6747
Fax: 604/822-5915
E-Mail: kevin.milligan@ubc.ca
AB  - We explore the fiscal implications of reforms to the Canadian retirement income system by decomposing the fiscal effect of reforms into two components. The mechanical effect captures the change in the government's budget assuming no behavioral response to the reform. The second component is the fiscal implication of the behavioral effect, which captures the influence of any induced changes in elderly labor supply on government budgets. We find that the behavioral response can account for up to half of the total impact of reform on government budgets. The behavioral response affects government budgets not only in the retirement income system but also through increased income, payroll, and consumption tax revenue on any induced labor market earnings among the elderly. We show that fully accounting for the behavioral response to reforms can change the cost estimates and distributive impact of retirement income reforms.
ER  -