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Social Assistance Use in Canada: National and Provincial Trends in Incidence, Entry and Exit *

2004; Volume: 27; Issue: 2 Linguagem: Inglês

1925-2218

Ross Finnie, Ian Irvine, Roger Sceviour,

Canadian Policy and Governance

Abstract Canada witnessed a dramatic decline in welfare participation from 1993/94 to the end of the nineties--one almost on a par with the U.S., but without the sort of landmark legislation adopted there. We explore the dynamics of Social Assistance usage in Canada over this period using data based on tax files for between 2 and 4 million individuals in each year from Canada's Longitudinal Administrative Data--the LAD. The unique attributes of this base--size, longitudinal nature and income information availability--allow us, for the first time, to calculate annual incidence, entry and exit rates both at the national and provincial level, broken down by family type. We discuss the variety of experiences of these groups; we identify the policy context and discuss the implications of the findings. ********** The use of social assistance (SA) is an important issue on Canada's social and economic policy agenda. For individual families, SA usage often reflects a situation of near-destitution and an exclusion from the social and economic mainstream. For children, being on SA can represent a critical period of disadvantage with potentially lasting effects. For governments, SA programs can be expensive. The incentive structures associated with SA also present a challenge to efforts aimed at integrating low-income individuals into the labour market. In short, while society wishes to care for the more disadvantaged through SA, it also cares about the attendant costs and disincentives. How bas Canada fared in the nineties? SA participation rose sharply during the recession of the early 1990s. In response, virtually all provinces, with varying degrees of intensity, instituted changes aimed at reducing SA dependency. Eligibility rules were tightened (especially for new entrants), benefit levels were cut, snitch lines were introduced, and other rule and procedural changes were adopted. That said, the more draconian elements of the US legislation that was adopted at about the same time were avoided. Meanwhile, the economy recovered, especially after 1995. Following these developments, the number of SA-dependent individuals fell quite remarkably, from a peak of 3.1 million to under 2 million by the year 2000, and the value of benefits received by SA recipients fell from $14.3b in 1994 to $10.4b in 2001 (current dollars). (1) The contribution of this paper is to map this cycle of SA dependency by exploiting the unique properties of the recently available tax-based Longitudinal Administrative Database (LAD). The longitudinal nature of the data, which define individuals both before and after their participation in SA, as well as over the course of SA spells, allows us to track not only participation rates in any given year, but also entry and exit patterns. (2) At the same time, the large sample sizes available allow us to break this analysis down by family type and province. These breakdowns are particularly interesting in a context where policy developments varied by province and family type, and where not all provinces shared equally in the recession or the expansion that followed it. Accordingly, an analysis by province and family type should help illuminate the debate on the effects of these different experiences on SA participation, and the appropriate future direction that policy should take. The precise causes of this wave in SA dependency are, however, not our concern in this paper. We do not, for example, attempt to apportion the movements in SA participation rates between causes related to economic growth on the one hand, and changes in the administration of SA programs on the other. That objective is part of our current research program, using the same data. Here, we focus on the empirical record of SA entry, exit, and annual participation rates, while placing these in the prevailing economic and policy context that characterised the period analysed. The paper is organized as follows. …