NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Retirement Incentives and Canada's Social Security Programs

Kevin Milligan, Tammy Schirle


This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.

Chapter in forthcoming NBER book Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, Axel Börsch-Supan and Courtney Coile, editors
Forthcoming from University of Chicago Press
in NBER Book Series - International Social Security

Since the mid-1990s in Canada, the employment and labor force participation rates of older men and women have increased steadily. In this study, we document Canadian trends alongside measures of the incentives to continue working at older ages embodied in Canada’s social security programs. The social security benefit an individual or couple receives largely depends on their career earnings. We demonstrate that Canada’s programs offering means-tested play an important role in the incentives one has to continue working at older ages. While the main pension program (the Canada Pension Plan) offers higher annual benefits when labor force departure and claiming are delayed, every dollar gained by a low-income senior in annual CPP benefits results in a loss of means-tested benefits. We represent this as an implicit tax on continued work. Since the late 1980s, it appears this implicit tax has been declining.

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