Simulating the Response to Reform of Canada's Income Security Programs / Michael Baker, Jonathan Gruber, Kevin Milligan.

Format:

Book

Author/Creator:

Baker, Michael.

Contributor:

National Bureau of Economic Research.

Gruber, Jonathan.

Milligan, Kevin.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9455.

NBER working paper series no. w9455

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

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.

Notes:

Print version record

January 2003.