web site -- http://socserv2.mcmaster.ca/~sedap
editor: Deb Fretz - fretz@mcmaster.ca

I. SEDAP Research Papers

SEDAP Research Papers are available on the SEDAP web site at no cost. Paper copies may be obtained at nominal charge by contacting Mrs. Gail Kalika, Department of Economics, McMaster University, Hamilton, Ontario, Canada L8S 4M4, or by e-mail -- qsep@mcmaster.ca.

SEDAP Research Paper No. 1:

Economic Costs of Population Aging: A Survey of the Issues and Evidence

Frank T. Denton (Economics, McMaster) and Byron G. Spencer (Economics, McMaster)

By the year 2031, all members of the "baby boom" generation will have reached the age of 65. If present trends continue, the fraction of Canada's population 65 and over will be far greater than previously experienced. This paper surveys the literature, issues and evidence relating to changes in the economic costs to society associated with this aging trend.

Some major points raised in this paper are:

• The ratio of the total population to the population of working age will not change much in Canada for another fifteen or twenty years. By the year 2031, it is projected that a quarter of the population will be 65 or over.

• The slower growth of the labour force that will accompany future population aging will have a direct negative effect on the productive capacity of the economy: other things equal, the growth of productive capacity will be slower because of slower labour force growth.

• Increases in rates of immigration or fertility would be unlikely to have much effect on population aging. Immigrants get older, like everyone else, and a sustained policy of higher immigration would have little long-run impact on either the median age or the age composition of the population. As for fertility rates, even with fertility rates substantially higher than those experienced for the last quarter-century, population aging would not be significantly reduced.

• It should be kept in mind that while population aging may put pressure on some categories of government expenditure (such as health care and old age security), it may also reduce pressure on others (such as education, employment insurance, correctional services).

SEDAP Research Paper No. 2:

How Much Help Is Exchanged in Families? Towards an Understanding of Discrepant Research Findings

Carolyn J. Rosenthal (Gerontology & Sociology, McMaster) and Leroy O. Stone (Statistics Canada)

There have been a number of studies over the past few decades that have attempted to quantify the amount of within-family help given to and received by older adults. With the publication of the General Social Survey of Canada in 1990, it became apparent that, when comparing such studies, there were widely discrepant findings in terms of the amount of such help.

Rosenthal and Stone examine several relevant studies and attempt to account for the sources of the discrepancies in their findings. Their conclusions are:

• Small samples and samples which are not representative of the national population yield different estimates of help provision than do large, population-based samples. Samples which are not population-based and nationally representative produce biassed results because structural factors, such as family size, age, gender or employment status, influence intergenerational exchange. If any of these structural factors are over- or under-represented in samples, the result may be rates of helping (whether higher or lower) that do not correspond to those that really exist in the general population.

• National surveys, which do not specifically focus on the family, yield a picture of less help than do local surveys which have family issues as their main focus. In the latter, individuals who are less involved in family life will be more likely to decline to participate. As a result, studies that focus specifically on intergenerational exchange may draw participation from a greater proportion of individuals actively involved in such exchange than would be found in the population as a whole. This sample bias results in higher estimates of help.

• Parents report higher levels of help given and received than do children because parents are usually asked about help to/from all or any of their children, while children report only on themselves.

• Studies that focus only on instrumental help (such as help with transportation, shopping, preparing meals) produce lower estimates of help than do studies that include emotional support, advice and help in crises. Generally, the greater the number of types of help asked about, the more likely it is that a respondent will say he/she has provided/received some help.

• The broader the time frame, the more likely respondents will report providing or receiving help. Therefore, studies that ask about help given or received within the past year produce higher estimates than those that ask about help within the past week or month.

SEDAP Research Report No. 3:

Did Tax Flattening Affect RRSP Contributions?

Michael R. Veall (Economics, McMaster)

There is an extensive empirical literature in economics that has tried to determine whether tax-favoured saving, such as Registered Retirement Savings Plans (RRSPs), is "new" saving or whether such plans have only served as repositories for saving that would have been made in any case. In standard economic theory, RRSP-type programs are seen as inducing new saving because they provide a higher rate of return than do non-tax-favoured forms of saving. To test this theory, Veall considers a case in which rates of return on RRSPs changed and examines the effect on the amounts contributed to RRSPs.

In 1988, marginal personal income tax rates changed in Canada, for some individuals by not insubstantial amounts. Marginal rates decreased for some taxfilers, increased for others and for others remained the same. An increase in an individual's marginal tax rate implies a greater rate of return to a given RRSP contribution as that individual is exempt from paying a now higher amount of tax, both on the contribution and especially on the investment income within the plan. The reverse is true for a decrease in the marginal tax rate. Thus Veall examines the RRSP contribution behaviour for taxfilers whose marginal tax rates increased, stayed the same or fell in 1988, using Statistics Canada's Longitudinal Administrative Data File.

Veall's findings are:

• While the tax rate changes in Canada in 1988 included significant marginal changes for some taxpayers, no convincing evidence is found that these changes affected RRSP contributions, either between 1987 and 1988 or over the longer period 1986 to 1989.

• For Canada as a whole, the predominant income tax change between 1987 and 1988 was a decrease in tax rates (and hence a lessening in the incentive to contribute to RRSPs), yet there was no reduction in RRSP contributions. In Ontario, while those with higher marginal tax rates did contribute slightly more to RRSPs, there was no fall in contributions by those whose marginal rates fell. In both New Brunswick and Nova Scotia, those whose marginal rates fell had a bigger increase in RRSP contributions than those whose marginal rates rose.

• While there is little evidence even in this very large sample (of over 100,000 individuals) that changes in tax rates (and hence in rates of return on RRSPs) will much affect RRSP contribution behaviour, it cannot, however, be concluded that there would be no effect on saving if RRSPs were abolished. Such a conclusion would be extrapolating far outside a sample experience in which almost every individual always had far greater after-tax return saving inside an RRSP than outside one.

II. First Annual SEDAP Conference: March 12-14, 1999

As part of SEDAP's proposed plan of research over the 5-year period of its support by the Social Sciences and Humanities Research Council of Canada, an annual conference series has been established. The purpose of these conferences is to bring together SEDAP members to share their research proposals and findings, and provide an opportunity for the exchange of views. This year's conference focussed on the research potential provided by the numerous large data sets in the hands of our two collaborating organizations, Statistics Canada and the Canadian Institute for Health Information, in the areas of aging and health. (The conference program is available at our web site.)

Presentations were made by Doug Norris and Michael Wolfson of Statistics Canada, both of whom outlined the numerous surveys and data compilations made by Statistics Canada over the years. Those of most interest to SEDAP researchers include the General Social Survey, the Survey of Labour and Income Dynamics, the Survey of Household Spending, the Longitudinal Administrative Data File and the National Population Health Survey. Jennifer Zelmer of the Canadian Institute for Health Information discussed the wide variety of data available in the Canadian health field and SEDAP member Parminder Raina (Clinical Epidemiology and Biostatistics, University of British Columbia) spoke about the Survey on Health and Aging.

SEDAP researchers, in turn, gave brief presentations on their proposed research that would utilize many of these data sets. These presentations were:

• Margaret Denton (Gerontology & Sociology, McMaster): Preparations for Later Life

• Michael Veall (Economics, McMaster): Government Policies and Incentives to Save

• William Scarth (Economics, McMaster): Alternatives for Raising Living Standards

• François Béland (Health Administration, Université de Montréal): Health and Community Characteristics

• Frank Denton (Economics, McMaster): Health System Planning

• Eric Moore (Geography, Queen's): Regional Dimensions and Migration Behaviour

• Parminder Raina (Clinical Epidemiology and Biostatistics, University of British Columbia): Social Services Utilization

• Carolyn Rosenthal (Gerontology & Sociology, McMaster): Aging and Family Life

• Peri Ballantyne (Centre for Research on Women's Health, University of Toronto): On the Future of Retirement

• John Burbidge (Economics, McMaster): Life Cycle Patterns of Income, Saving and Retirement

• Dean Mountain (Business, McMaster): Expenditure Patterns of the Pre-elderly and Elderly