Social Security and Retirement in Canada

Abstract

Government transfers to older persons in Canada are one of the largest and fastest growing components of the government budget. I provide an overview of the interaction between these transfer programs and retirement behavior. I begin by documenting historical trends in labor force participation and program receipt, and contemporaneous patterns of work and income receipt for the current cohort of older persons. I then present an overview of the structure of this system of Canadian transfer programs. Finally, I present results of a simulation model which measures the implicit tax/subsidy rate on work after age 55 through this system. I find that workers, there are modest taxes on work through age 64, that rise to fairly high levels thereafter. But these taxes are substantially lower for single workers, since they do not have wives eligible for means-tested transfers, and for workers with substantial other sources of income is not at all eligible for means-tested transfers.

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