Social and Economic Dimensions of an Aging Population


Vol. 4 No. 4

Winter 2002/2003

SEDAP (Social and Economic Dimensions of an Aging Population) is a multidisciplinary research program studying a wide range of aging-related issues and is funded by the Social Sciences and Humanities Research Council of Canada. SEDAP is centred at McMaster University and involves researchers from that institution as well as from the University of British Columbia, Université de Montréal, Queen's and the University of Toronto.


I. Upcoming SEDAP Conference

SEDAP will be hosting a conference on April 10-11, 2003, entitled "Moving Towards an Older Society". The conference will be held at McMaster University, Hamilton, Ontario. Speakers will include:

For further information, please contact Gail Elliot at the McMaster Centre for Gerontological Studies, email:

II. SEDAP Research Papers

SEDAP Research Papers are available on the SEDAP website at no cost. Paper copies may be obtained for a nominal charge. Please contact Mrs. Gail Kalika, Department of Economics, KTH-426, McMaster University, Hamilton, Ont., Canada, L8S 4M4.

Brief descriptions follow of the most recently released papers in the SEDAP series.

SEDAP Research Paper No. 82:

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

Frank T. Denton (Department of Economics, McMaster), Dean C. Mountain (Faculty of Business, McMaster) and Byron G. Spencer (Department of Economics, McMaster)

This paper investigates how the expenditure patterns of older households vary as age increases, and how they are affected by the transition from work to retirement. A question of special interest here is whether observed differences between pre- retirement and post-retirement expenditure patterns are a consequence of age-related changes in tastes or of reductions in income.

The data used in the study are from Statistics Canada's Family Expenditure Survey (FAMEX) for 1969, 1978, 1982, 1986, 1992 and 1996. The FAMEX data base has the advantage of large sample sizes but provides no linkage of individual households from one survey to the next. The study does not work directly with the microdata from the FAMEX surveys as that would make dealing with durables difficult since at the individual household level purchases of particular durable goods are "lumpy" and in any given year would often be zero. Observations are therefore grouped according to age and region of the country and the resulting group expenditure share observations are used, pooled across surveys. The analysis is confined to households with husband and wife both present, living in urban centres of 30,000 or more population and with the husband aged 50 or older.

In descriptive terms, the data show a consistent rise with age in the percentage spent on food at home, offset partially by a decrease in the percentage spent on food from restaurants. The budget share of shelter also increases consistently with age. In round numbers, the average husband/wife household spends about two-fifths of its budget on food and shelter when the husband is in his early fifties but more than half when he is 75 or older.

To examine whether these changes reflect changing tastes that come with age or changes in household purchasing power, the authors estimate a model, based on Deaton and Muellbauer's Almost Ideal Demand System, consisting of a system of ten share equations for ten broad expenditure categories, and they find this model performs well. Using simulation experiments to vary the levels of income in retirement, they conclude that age alone does not induce the kinds of changes in expenditure patterns apparent in the data after age 65, but that these changes are primarily the consequence of declines in income after retirement.

SEDAP Research Paper No. 83:

Understanding the Relationship between Income Status and the Restrictions in Instrumental Activities of Daily Living among Disabled Older Adults

Parminder Raina (Department of Clinical Epidemiology and Biostatistics, McMaster) and Micheline Wong (British Columbia Research Institute for Children's and Women's Health)

The authors of this paper note that, despite numerous studies addressing the issue, the relationships between aging, income and health (including disability) have not been fully elaborated. They also note that few studies have investigated the ways in which income and functional independence interact among disabled older adults. Thus in their study, they examine the restrictions in instrumental activities of daily living (IADL) among disabled Canadian older adults and the association with income status and also describe the relationship between income, severity of disability and functional independence.

Data in the study are from the 1986 and 1991 Health and Activity Limitation Surveys (HALS), selecting respondents aged 55 and over. Income status is based on Statistics Canada's low income cut-offs. The data show that seniors (those over age 65) were more likely than those aged 55-64 to experience more severe disabilities and IADL restrictions. Low-income individuals generally reported more restrictions in performing everyday activities than did high-income respondents. Senior women were found to be consistently disadvantaged in terms of income, disability status and functional independence compared to senior men.

The authors conclude by proposing an empirical model of the relationship between income status, severity of disability and functional independence. They note, however, that the analyses presented in their paper are not able to establish the temporal properties of such a relationship due to the cross-sectional nature of the HALS data and thus do not represent a direct test of the empirical model they propose.

SEDAP Research Paper No. 84:

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

Kao-Lee Liaw (School of Geography and Geology, McMaster) and William H. Frey (Population Studies Center, University of Michigan - Ann Arbor)

In earlier work (see SEDAP Research Paper No. 17), Liaw, Frey and Lin examined the role played by the location of adult children in the migration decisions of U.S. black and white elderly who migrated from their state of birth. In the current paper, Liaw and Frey assess the importance of the location of adult children as an attraction for U.S. black and white elderly return migrants (those returning to the state of their birth) and onward migrants (those moving from a non-birth state to another non-birth state).

The study examines a sample of black and (non-Hispanic) white U.S.-born individuals aged 60 and over in 1990 who were not living in their birth state in 1985. The sample was drawn from U.S. census data. Return migrants are defined as those whose 1990 state of residence was the same as their birth state and onward migrants are defined as those whose 1990 state of residence was different from their birth state and from their 1985 state of residence. As the data set contains no information on the location of non-coresident children, the authors create proxy variables for the location of adult children based on race-specific and state- specific data for persons aged 30 to 59 in 1990.

Among the authors' findings were the following:

SEDAP Research Paper No. 85:

Changing Income Inequality and Immigration in Canada 1980-1995

Eric G. Moore and Michael A. Pacey (Department of Geography, Queen's)

The focus of this paper is on the role of immigrant-led households in recent changes in income inequality among Canadian households at the provincial and sub-provincial level. Population growth in Canada due to immigration has been primarily concentrated in the major metropolitan areas (Montreal, Toronto and Vancouver) and in the provinces in which they are located. Thus the authors feel that examining income inequality by geographic area is needed, as resources may then be directed to less well-off populations and areas.

The data used in this study are from the 1981, 1986, 1991 and 1996 Census of Canada Public Use Microdata files for households. Household rather than individual income is used, on a pre-tax basis. Household incomes are then adjusted for the number of household members and thus the results of the study are defined among persons rather than households. Three different measures of income inequality (Gini, Atkinson and Theil) are used in the analysis, with the results presented only for the Theil indices as they are intermediate to the other measures.

The results presented support the general view that income inequality in Canada has been increasing over the past two decades. The analysis also indicates that there is considerable diversity in income inequality, across both social and geographic groups, with immigrants featuring prominently in the income inequality picture. Between 1990 and 1995, for example, income inequality in Toronto and Vancouver increased at almost twice the rate of any other city while the contribution of recent immigrants to the growth in inequality in these two cities was three times that in any other city. The authors find, however, that immigrants who have lived in Canada for more than five years have noticeably lower levels of inequality than do more recent immigrants, suggesting that the issue may be as much one of adjustment to a new society and a new labour market as one of fundamental differences.

SEDAP Research Paper No. 86:

The Dynamics of Food Deprivation and Overall Health: Evidence from the Canadian National Population Health Survey

Logan McLeod and Michael R. Veall (Department of Economics, McMaster)

This paper investigates the common finding that measures of individual socioeconomic status and measures of health tend to be positively correlated. The authors use food deprivation status as a measure of socioeconomic status and note that, as food deprivation is concentrated among lower socioeconomic status groups, studying food deprivation is not likely relevant for the entire range of health differences.

The data used are from Statistics Canada's National Population Health Survey (NPHS). This survey contains much information on the physical and mental health of Canadians but no information on consumption or wealth. Thus the authors choose to employ food deprivation information from the 1996-97 and 1998-99 surveys as a measure of poverty. Food deprivation in the NPHS is measured by the response to questions regarding whether households ever went without food due to a lack of money. Two measures of health status are used in the analysis, along with age, labour force status and household income.

Using an approach based on Granger causality, the authors find that there is no statistically significant effect of 1996 food deprivation status on 1998 health status, conditional on 1996 health status. However, the effect of 1996 health status on 1998 food deprivation status, conditional on 1996 food deprivation status, appears to be large and statistically significant. There is thus stronger evidence that causality runs from health status to food deprivation status as opposed to vice versa.

SEDAP Research Paper No. 87:

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

Kao-Lee Liaw, Lei Xu and Mingzhu Qi (School of Geography and Geology, McMaster)

Quebec has experienced a declining share of the Canadian population since the mid-1960s: 28.9% in 1966, 25.4% in 1991 and 23.8% in 2001. Although the life expectancy of Quebec residents has been shorter than that of Canada as a whole for some time, the gap narrowed to about one year for males and essentially disappeared for females by the 1990s, so that Quebec's higher mortality is no longer an important factor in Quebec's diminishing share of the national population. Quebec's fertility levels declined sharply in the 1960s and have stayed below the Canadian average in recent decades. However, as a determinant of Quebec's changing share of the national population, the migration process is more important than birth and death processes.

Quebec's share of the immigrants who landed in Canada between 1980 and 1999 was 16.6%, which is much lower than its share of the Canadian population. Moreover, Quebec is the only province in Canada that has experienced a net loss in interprovincial migration every year since 1966. This paper thus focuses on different types of migration. The authors examine (1) the exchange of Canadian-born elderly lifetime (birth-to-1966) migrants between Quebec and the rest of Canada (2) Quebec's share of immigrants at the time of landing in Canada from 1980 to 1999 and (3) the post-landing relocations of 1980-1992 immigrants between Quebec and the rest of Canada.

Among the main finding of the paper are:

The authors conclude with a number of recommendations for increasing migration and immigration to Quebec, including the easing of restrictive language laws.

SEDAP Research Paper No. 88:

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

Sule Alan (Department of Economics, York University), Thomas F. Crossley (Department of Economics, McMaster), Paul Grootendorst (Faculty of Pharmacy, Toronto) and Michael R. Veall (Department of Economics, McMaster)

The authors of this paper continue their earlier work presented in SEDAP Research Paper No. 19. (See SEDAP Bulletin, Vol.2 No.2, Summer 2000.) In the current paper, they expand their previous analysis of public drug subsidies as these affect the senior population and now examine the effects of such programs on non-seniors.

Where the authors' previous research used the public use version of Statistics Canada's Family Expenditure Survey, their current research uses the master data files of this survey, which contain provincial rather than the broader regional identifiers of residence. This allows the inclusion of two additional years of survey data and provides for better isolation of the populations affected by program changes, thus permitting more reliable identification of program effects.

With the improved data set, the authors are able to replicate their previous findings for the senior population, which are that expanding prescription drug benefit programs to seniors is unlikely to be substantially redistributive in the income sense. When they turn their analysis to drug programs for the non-senior population, however, they find that the programs that have been developed thus far in Canada appear to have had mildly progressive consequences for the distribution of resources across households.

editor: Deb Fretz -
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Last revised: Jan 7, 2003.