[McMaster Crest] QSEP
Research Institute for Quantitative Studies in Economics and Population

Abstracts of Research Reports: 2002

  1. Alternative Pasts, Possible Futures: A "What If" Study of the Effects of Fertility on the Canadian Poulation and Labour Force

    by Frank T. Denton, Christine H. Feaver, and Byron G. Spencer

    The "baby boom" that followed World War II, and the subsequent "baby bust", have cast a long shadow over the Canadian population, society, and economy. Drawing on a series of counterfactual projections, this paper considers what the year 2001 would have looked like if things had been different if there had been no baby boom or no bust, or if the bust had been delayed, to take three examples. The paper then considers what will happen in the coming decades under a number of alternative assumptions. A major finding is that the boom had much less impact on the 2001 age structure of the population and labour force than did the bust that followed. For the future, population aging, slower rates of growth, and increased dependency ratios are likely features, but one should be careful not to overestimate the prospective "dependency burden".

  2. Baby-Boom Aging and Average Living Standards

    by William Scarth and Malick Souare

    A calibrated overlapping generations model is used to investigate the effect on living standards of the aging baby boom. The relative scarcity of labor when baby boomers are old raises the wage-rental ratio by an amount that is sufficient to ensure that the post baby-boom generation can enjoy a modest increase in living standards - despite facing higher taxes. Nevertheless, the baby-boom cohort itself suffers a drop in consumption, and when the two generations are considered as a group, overall living standards fall by a modest amount. These results are robust to several changes in specification: the existence of liquidity constraints, alternative assumptions regarding individuals' expectations concerning future interest rates, and different fiscal policies concerning the tax treatment of private saving for retirement. Policy initiatives that bring significant hardship today to avoid a future "crisis" are not supported by the standard overlapping generations model.

  3. The Impact of Reference Pricing of Cardiovascular Drugs on Health Care Costs and Health Outcomes: Evidence from British Columbia -- Volume I: Summary

    by Paul V. Grootendorst, Lisa R. Dolovich, Anne M. Holbrook, Adrian R. Levy, Bernie J. O'Brien

    Objective: We estimate the effects of Reference Pricing, a drug cost control policy introduced by the BC Ministry of Health Pharmacare program in 1995, on its program expenditures for seniors, out of pocket costs paid by its senior beneficiaries, indicators of beneficiary health status and attendant Ministry of Health expenditures on physicians and hospitals services. Rationale: Reference pricing (RP) limits the reimbursement of a group of drugs with similar therapeutic effect but different active ingredients to a fixed "reference price". The setting of the reference price varies by jurisdiction but typically is based on an average of the lowest cost "reference standard" drugs within the group. Critics of RP contend that the partially subsidized and fully subsidized (reference standard) drugs are not therapeutically interchangeable, and therefore patient health will be compromised and use of other non-pharmacologic health services may increase as a result, thus partially or wholly offsetting any potential cost savings from the policy.

    Findings: The application of RP to 3 groups of cardiac drugs produced annualized savings to Pharmacare of about $7.7 million, or 3.6% of the $213.7 million that Pharmacare spent on drugs for seniors (not including dispensing fees) in 1997. The additional costs for physician consultations were modest, around $500,000 in the subsample of seniors we studied, from the introduction of the RP plans to March 1998, although the costs could be greater, perhaps up to twice this amount, if we accounted for all seniors exposed to the RP over the same period. We found no effects of RP on mortality, or premature admission to a longterm care facility.

    Seniors using the nitrate drugs for angina that were no longer fully subsidized when RP was introduced faced a higher probability in the short run of using medicines to deal with acute exacerbations of angina and in the longer run having bypass surgery or other revascularization procedures. No long run effects of morbidity were observed for the application of RP to two different types of anti-hypertensive medications, although there was a short run increase in the rate of revascularizations among those taking 1 type of anti-hypertensive: the ACE inhibitors. The results of these morbidity models should be seen as tentative, until these results can be replicated using alternative estimation strategies.

    Conclusions: The introduction of RP can indeed reduce Ministry of Health drug expenditures. The effects of RP on patient morbidity remain to be fully investigated before definitive policy recommendations can be offered.

  4. The Impact of Reference Pricing of Cardiovascular Drugs on Health Care Costs and Health Outcomes: Evidence from British Columbia -- Volume II: Technical Report

    by Paul V. Grootendorst, Lisa R. Dolovich, Anne M. Holbrook, Adrian R. Levy, Bernie J. O'Brien

    (see QSEP 369 for abstract)

  5. The Impact of Reference Pricing of Cardiovascular Drugs on Health Care Costs and Health Outcomes: Evidence from British Columbia -- Volume III: ACE and CCB Literature Review

    by Lisa R. Dolovich, Anne M. Holbrook, Margaret Woodruff

    (see QSEP 369 for abstract)

  6. Do Drug Plans Matter? Effects of Drug Plan Eligibility on Drug Use Among the Elderly, Social Assistance Recipients and the General Population

    by Paul Grootendorst and Mitchell Levine

    The 1984 Canada Health Act does not require that the provinces subsidize prescription drugs. Many provinces do, however, provide categorical coverage to the elderly, social assistance recipients and others, although the generosity of coverage is highly variable. A system of parallel private insurance covers the non-elderly ineligible for social assistance. In this study, we assessed the socio-economic, health and demographic determinants of private drug insurance. We also assessed the effect of inter- provincial variations in drug insurance coverage for the elderly and low income on variations in drug insurance coverage for the elderly and low income on their drug use. In addition, using instrumental variables methods, we considered the effect of prescription drug insurance coverage status on drug use in the non-elderly population ineligible for social assistance. Consistent with the previous literature, we find that for most seniors and non-indigent, drug coverage has only minor effects on drug use. The drug use of social assistance recipients was, however, sensitive to even relatively modest copayments of $0-$6.

  7. Student Enrolment and Faculty Recruitment in Ontario: The Double Cohort, the Baby Boom Echo, and the Aging of University Faculty

    by Byron G. Spencer

    The recent restructuring of the Ontario secondary school system means that two graduating classes the so-called "double cohort" will compete for admission to the universities in the fall of 2003. Unless admission standards are raised to restrict enrolment, the sheer numbers involved will place extraordinary demands on the system for half a decade. The demands will be difficult to accommodate, not least because more than half of current faculty are over the age of 50, and most will retire in this decade. Working with the latest available numbers, this paper provides projections to show the impact that the double cohort will have on student numbers, faculty requirements, and the need to recruit new faculty.

  8. Aggregation Effects on Price and Expenditure Elasticities in a Quadratic Almost Ideal Demand System

    by Frank T. Denton and Dean C. Mountain

    While it is well known that demand elasticities calculated at the macro level will in general differ from those calculated at the micro level because of aggregation effects there remain the questions of how large the effects are, and how they vary with the degree of nonuniformity in the income distribution. We explore those questions with models based on a quadratic version of the Almost Ideal Demand System. We investigate the elasticity differences theoretically and then calibrate the models and generate numerical results, using income data for seven countries with widely different distributions. The aggregation effects are found generally to be rather small, even with highly nonuniform income distributions.

  9. Age, Retirement and Expenditure Patterns: An Econometric Study of Older Canadian Households

    by Frank T. Denton, Dean C. Mountain, and Byron G. Spencer

    The paper explores the allocation of consumption expenditure by the older population among different categories of goods and services, and how expenditure patterns change with age within that population. Of particular interest is whether observed differences between pre- retirement and post-retirement patterns are a consequence of changes in "tastes" or reductions in income. An adapted form of the Deaton and Muellbauer Almost Ideal Demand System is estimated with data from six Family Expenditure Surveys and used to investigate that question. The findings suggest that observed changes in budget allocations are most closely related to reductions in income.

  10. Location of Adult Children as An Attraction for Black and White Elderly Return and Onward Migrants in the United States: Application of a Three-level Nested Logit Model with Census Data

    by Kao-Lee Liaw and William H. Frey

    This paper assesses the influence of the location of adult children on the 1985-90 interstate migration of black and white elderly "non-natives" (i.e. those whose state of residence in 1985 was different from their state of birth) in the United States, based on the application of a three- level nested logit model with 1990 census data. The model accounts for (1) the choice between departing and staying put, (2) the choice between return and onward migration, and (3) the choice of a specific destination.

    The main findings are as follows. First, elderly non-natives were strongly attracted by the location of their adult children when they made their migration decisions at all levels of the choice framework, and this attraction was stronger for the widowed than for those of other marital statuses. This finding can be taken as empirical support for Eugene Litwak's theory of the modified extended family. Second, in the return/onward and destination choice processes, the attraction of the location of adult children was found to be stronger for whites than for blacks. This finding is consistent with the finding of Hogan et al (1993) that whites had stronger intergenerational connections than did blacks.

  11. The Dynamics of food Deprivation and Overall Health: Evidence from the Canadian National Population Health Survey

    by Logan McLeod and Michael R. Veall

    The paper explores whether the responses to food deprivation questions on the longitudinal Canadian National Population Health Survey help explain the links between socio-economic status and health. Transitions in food deprivation status are correlated with changes in health status. While health transitions are correlated with changes in food deprivation status, there is little evidence that change in food deprivation status leads changes in health status but some evidence that change in health status leads change in food deprivation status.

  12. Quebec's Lackluster Performance in Interprovincial Migration and Immigration: How, Why, and What Can Be Done?

    by Kao-Lee Liaw, Lei Xu, and Mingzhu Qi

    In light of the persistent trend in Quebec's diminishing share of the Canadian population (from 28.9% in 1966 to 24.0% in 2000), this paper examines Quebec's roles in the life-time interprovincial migration of the Canada-born elderly, the initial destination choices of landed immigrants, and the post-landing relocations of immigrants.

    From the 1996 census data, we found that Quebec ended up with an overall net loss of 4.9% of Canada-born elderly lifetime migrants, which was highly selective of non-Francophones and moderately selective of those with better education and higher income. The selective net loss was rooted in the cultural disharmony between Quebec and the rest of Canada as well as Quebec's relative shortage of good economic opportunities. From the micro data on the landed immigrants, we found that Quebec attracted only 16.6% of Canada's 1980-99 landed immigrants, and that its share was highly selective by immigration class, language ability, and place of birth. Although the Quebec government got the exclusive responsibility for the selection of its independent immigrants since 1991, we have identified serious internal and external obstacles and constraints that prevent Quebec from getting enough immigrants to match its population share in the foreseeable future. From the 1980-95 data of linked records of landing and tax-filing, we found that the post-landing relocations of immigrants resulted in Quebec's net loss of 13% in three years after landing, and that the net loss was also highly selective by immigration class, language ability, and place of origin, but fortunately did not result in a larger net loss of the best educated immigrants. Some reasons for the selective losses were the non-French-speakers' difficulty in adjusting to the French milieu, the business immigrants' use of Quebec as a stepping stone to the rest of Canada, and the desire of most immigrants to have their children educated in English schools.

    In our opinion, the fundamental way to increase Quebec's share of new immigrants and to reduce its net losses of Canada-born and foreign- born migrants is to soften its restrictive language regulations and to help Quebeckers cultivate positive views on immigration. Adoption of foreign children, recruitment of third-world students and researchers in the universities and research institutes in French-speaking countries, and invitation of non-Francophone students from the rest of Canada to study in the French schools of Quebec are some viable options that can help reduce Quebec's loss in population share in the long-run without threatening its Frenchness.

  13. Out-of-Pocket Prescription Drug Expenditures and Public Prescription Drug Programs

    by Sule Alan, Thomas F. Crossley, Paul Grootendorst, and Michael R. Veall

    Canadian household prescription drug expenditures are studied using different years of the Statistics Canada Family Expenditure Survey. Master files are used, expanding the number of available years and permitting provincial rather than regional identifiers. Nonparametric Engel curves are estimated. Difference-in-difference mean and 80th percentile regressions examine budget shares by low-income and high-income households before and after the introduction of provincial prescription drug programs. The evidence is consistent with the view that unlike senior prescription drug subsidies, nonsenior prescription drug subsidies are probably more redistributive than an equal-cost proportional income transfer.

Last updated: Jan 1, 2006.
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