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A model of the labor supply determinants of Canada’s elderly population Tanner, Tremain 1981

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A MODEL OF THE LABOUR SUPPLY DETERMINANTS OF CANADA'S ELDERLY POPULATION by TREMAIN TANNER B.A., The U n i v e r s i t y o f B r i t i s h Columbia, 1978 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n ^ THE FACULTY OF GRADUATE STUDIES (S c h o o l o f Community and R e g i o n a l P l a n n i n g ) We a c c e p t t h i s t h e s i s as c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH COLUMBIA September 1981 Tremain Tanner I n p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f t h e r e q u i r e m e n t s f o r an advanced degree a t the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I ag r e e t h a t t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r a gree t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by t h e head o f my department o r by h i s o r h e r r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . y Department o f PLANNING  The U n i v e r s i t y o f B r i t i s h C o l u m b i a 2075 Wesbrook P l a c e V ancouver, Canada V6T 1W5 Date SEPTEMBER 2 9 t h , 1981 DE-6 (2/79) ABSTRACT T h i s study examines Canada's aging t r e n d , the f a c t o r s i n f l u -encing the e l d e r l y ' s withdrawal from the labour f o r c e , and the i m p l i c a t i o n s o f the two trends f o r p l a n n e r s and p o l i c y makers. Canada's p o p u l a t i o n i s aging. The a b s o l u t e and r e l a t i v e number of people 65 and over i s p r o j e c t e d to i n c r e a s e w e l l i n t o the twenty-f i r s t c entury. Over t h i s same p e r i o d o f time the e l d e r l y , d e f i n e d as those persons 65 and over, are expected to reduce t h e i r p a r t -i c i p a t i o n i n the l a b o u r f o r c e . With a g r e a t e r p r o p o r t i o n of e l d e r l y i n the p o p u l a t i o n and fewer of them working the costsvj.ahd burdens i n v o l v e d w i t h s u p p o r t i n g t h i s segment of the p o p u l a t i o n w i l l i n c r e a s e . I t i s important, t h e r e f o r e , t h a t planners and p o l i c y makers understand why the p o p u l a t i o n i s aging, why the e l d e r l y are withdrawing from the labour f o r c e , and what the p o s s i b l e economic and s o c i a l i m p l i c a t i o n s o f these trends a r e . Based on e x p l a n a t o r y models of the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n c o n s t r u c t e d mainly by r e s e a r c h e r s i n the U n i t e d S t a t e s , a .multiple r e g r e s s i o n a n a l y s i s i s conducted which attempts to e v a l u a t e those v a r i a b l e s i n c l u d e d i n an e x p l a n a t o r y equation which accounts f o r the v a r i a n c e i n the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e i n Canada. C r o s s - s e c t i o n analyses are conduct-ed f o r three y e a r s — 1 9 6 1 , 1971, and 1 9 7 6 — w i t h data d e r i v e d p r i n c i p a l l y from S t a t i s t i c s Canada census sources and aggregated at the p r o v i n c i a l l e v e l . In c o n t r a s t to s t u d i e s o r i g i n a t i n g i n the U n i t e d S t a t e s , the r e s u l t s o b t a i n e d i n t h i s study found pension b e n e f i t s were not the most s i g n i f i c a n t f a c t o r i n e x p l a i n i n g the d e c l i n e i n the e l d e r l y 1 s l a b o u r f o r c e p a r t i c i p a t i o n i n Canada. Both the unemployment r a t e and the o c c u p a t i o n chosen by an e l d e r l y l a b o u r f o r c e p a r t i c i p a n t c o n s i s t e n t l y proved to be more s i g n i f i c a n t f a c t o r s i n accounting f o r the v a r i a n c e i n the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e i n Canada. The economic and s o c i a l i m p l i c a t i o n s of a s o c i e t y which i s aging and one i n which an i n c r e a s i n g number of e l d e r l y are choos-i n g not to work are d i s c u s s e d . The two areas i n which f u t u r e p lanners and p o l i c y makers w i l l face the most p r e s s i n g problems i n terms o f funding and program d e l i v e r y are the p u b l i c pension and h e a l t h care s e r v i c e s . There w i l l be a number o f o t h e r areas a f f e c t e d by the i n c r e a s e d i n c i d e n c e of e l d e r l y r e t i r e d persons i n the p o p u l a t i o n . I t i s important, t h e r e f o r e , t h a t r e s e a r c h be conducted today, at a l l l e v e l s , i n t o the v a r i o u s impacts a l a r g e p r o p o r t i o n a t e i n c r e a s e i n non-working e l d e r l y w i l l have on Canadian s o c i e t y i n the f u t u r e . ACKNOWLEDGEMENT I would e s p e c i a l l y l i k e to acknowledge the i n s p i r a t o r and mo t i v a t o r behind t h i s t h e s i s — m y mother, the g r e a t e s t educator i n my l i f e . i v TABLE OF CONTENTS Page ABSTRACT i i . ACKNOWLEDGEMENT i v TABLE OF CONTENTS V LIST OF TABLES v i i i L IST OF FIGURES i x CHAPTER 1. INTRODUCTION 1 A. Problem Statement 1 B. T h e s i s O b j e c t i v e s 3 C. Methodology 4 2. DEMOGRAPHIC AND ECONOMIC CHARACTERISTICS OF THE ELDERLY 6 A. The A g i n g o f t h e P o p u l a t i o n 6 B. H i s t o r i c Measures o f the E l d e r l y ' s Labour Su p p l y and P r o j e c t e d Dependency R a t i o s 14 3. A MODEL OF THE LABOUR SUPPLY DETERMINANTS OF THE ELDERLY . 21 A. The E l d e r l y and the Labour S u p p l y 21 ( i ) Labour S u p p l y Theory 21 ( i i ) The E l d e r l y ' s Labour Supply D e t e r m i n a n t s . 35 (a) P e n s i o n R e l a t e d F a c t o r s 36 (b) H e a l t h R e l a t e d F a c t o r s 40 (c) Economic F a c t o r s 42 (d) Other F i n a n c i a l F a c t o r s 45 (e) F a m i l y and I n d i v i d u a l F a c t o r s 48 B. A Model o f the E l d e r l y 1 s Labour Supply 50 v (i) The Model 50 ( i i ) The Dependent V a r i a b l e 5 1 ( i i i ) The Independent V a r i a b l e s 5 1 4. THE EMPIRICAL FINDINGS .. 56 A. The Data Base 56 B. D i s c u s s i o n o f R e s u l t s 57 C. P r i n c i p a l Data and Model D e f i c i e n c i e s 66 (i) D e f i c i e n c i e s P a r t i c u l a r t o the Data 6 6 (a) Lack of a H e a l t h V a r i a b l e 66 (b) Lack o f Disaggregated Data v 67 (c) Other Data D e f i c i e n c i e s 68 ( i i ) D e f i c i e n c i e s P a r t i c u l a r t o the Model .... 68 (a) P o s s i b l e Problems A s s o c i a t e d With M u l t i c o l i n e a r i t y 6 9 (b) P o s s i b l e B i a s i n the S e l e c t i o n of V a r i a b l e s 73 5. CONCLUSION 75 A. I m p l i c a t i o n s of an Aging S o c i e t y 7 5 (i) Economic 75 (a) The Dependency Burden 75 (b) P r o d u c t i v i t y 82 (c) M o b i l i t y 83 (d) Consumption, Saving, and Investment 84 ( i i ) S o c i a l 86 (a) P o l i t i c a l I m p l i c a t i o n s 87 (b) P l a n n i n g and A d m i n i s t r a t i v e I m p l i c a t i o n s 87 ( i i i ) I m p l i c a t i o n s of the Regression A n a l y s i s 89 v i B. D i r e c t i o n s f o r Future Research 9 3 BIBLIOGRAPHY . 95 GLOSSARY 102 APPENDICES A. Raw Data 103 B. V a r i a b l e s i n Retirement and Pre Retirement Surveys 105 C. S e l e c t e d Models Used by Researchers o f the E l d e r l y 1 s Labour Supply 108 v i i -LIST OF TABLES Table Page I. Number and P r o p o r t i o n o f E l d e r l y i n T o t a l P o p u l a t i o n 1851-1976 7 I I . Rates o f B i r t h , Death, and N a t u r a l Increase, Canada, 1851-1976 8 I I I . Rates of Immigration, E m i g r a t i o n and Net M i g r a t i o n , Canada, 1851-1976 10 IV. P r o j e c t e d P r o p o r t i o n s o f P o p u l a t i o n 65 and Over, Canada, 1976-2051 12 V. The Labour Force and P a r t i c i p a t i o n Rates f o r Canada's E l d e r l y , 1921-1976 15 VI. Young, Old, and T o t a l Dependency R a t i o s , Canada, 1881-1976 18 V I I . The Burden of the Non-Working E l d e r l y , Canada, 1921-2000 19 V I I I . R e s u l t s o f Regression A n a l y s i s 60 IX. R e s u l t s o f Regressions C o r r e c t e d f o r M u l t i c o l i n e a r i t y 71 v i i i LIST OF FIGURES Figure Page I. The Individual Labour Supply Function 23 I I . The E f f e c t of Pension Plans on Individual Labour Supply 27 I I I . Work and Leisure P r o f i l e s of the Three A c t i v i t y Life-Cycle Models 32 ix Chapter 1 INTRODUCTION A. Problem Statement The r e s e a r c h p r e s e n t e d i n t h i s t h e s i s most a p p r o p r i a t e l y f i t s i n t o the f i e l d o f study known as Labour, or Manpower, Economics. The f i e l d of manpower economics has been d e f i n e d as the s u b d i v i s i o n of economics t h a t d e a l s w i t h the f o r c e s o p e r a t i n g w i t h i n labour markets (Jakubauskas and Palomba, 1973). One o f the most p r e s s i n g l a b o u r market problems i n c l u d e s the i n c r e a s i n g t r e n d towards de-creased l a b o u r f o r c e p a r t i c i p a t i o n o f the e l d e r l y ( e a r l i e r r e t i r e -ment) , coupled with g r e a t e r l o n g e v i t y and a growing p r o p o r t i o n o f e l d e r l y p o p u l a t i o n . As Canada approaches the t w e n t y - f i r s t century the e l d e r l y , d e f i n e d i n t h i s study as t h a t p a r t o f the p o p u l a t i o n 65 and over, are expected t o comprise a s u b s t a n t i a l l y l a r g e r p r o p o r t i o n o f the t o t a l p o p u l a t i o n . By the year 2031 p o p u l a t i o n p r o j e c t i o n s assuming low f e r t i l i t y , low m o r t a l i t y ; and medium net m i g r a t i o n foresee t h a t over one i n f o u r Canadians w i l l be 65 years o r o l d e r . T h i s compares with approximately one i n ten today. In a d d i t i o n , l a b o u r f o r c e p a r t i c i p a t i o n r a t e s f o r Canada's e l d e r l y have been d e c r e a s i n g from 33 percent i n 1921 to j u s t over 9 p e r c e n t i n 1976 (Denton, Feaver, and Spencer (1980); and Denton and Ostry (1967)). The i m p l i c a t i o n s of these dramatic changes i n Canada's age p r o f i l e and labour market a c t i v i t y are numerous and s o c i a l l y p e r v a s i v e . Many ques t i o n s stem from these demographic and economic changes. I t i s the purpose of t h i s t h e s i s t o address j u s t one. 1 2 As the average Canadian progresses through the l i f e - c y c l e he, or she, g e n e r a l l y engages i n some form o f employment. T h i s a c t i o n adds to the amount of economic a c t i v i t y i n the n a t i o n and pro v i d e s support through c o n t r i b u t i o n s to s o c i a l s e c u r i t y programs f o r young dependents and o l d dependents. Support programs f o r both groups o f dependents i n c l u d e a number o f government programs which make d i r e c t t r a n s f e r payments to the two groups. Examples of these programs i n c l u d e the Family Allowance f o r young dependents and the Old Age S e c u r i t y (O.A.S.) and Guaranteed Income Supplement (G.I.S.) f o r e l d e r l y dependents. U l t i m a t e l y , the time comes when the c o n t r i b u t o r to s o c i a l s e c u r i t y programs r e t i r e s o r withdraws from p a r t i c i p a t i o n i n the labour f o r c e and h i m s e l f becomes dependent, to some degree, on those s t i l l a c t i v e i n the l a b o u r f o r c e f o r support. The reasons f o r t h i s withdrawal, or f o r p a r t i c i p a t i o n p a s t 65, the g e n e r a l l y accepted age of r e t i r e m e n t , are many and v a r i e d . Given t h a t a f t e r the t u r n of the century over one q u a r t e r of Canada's p o p u l a t i o n w i l l be of r e t i r e m e n t age (assuming t h a t the age of pension and/or r e t i r e m e n t e l i g i b i l i t y w i l l remain a t 65), and t h a t the labou r f o r c e p a r t i c i p -a t i o n r a t e of t h i s age group i s expected to d e c l i n e , i t i s important t h a t the f a c t o r s which determine the e l d e r l y ' s d e c i s i o n to r e t i r e from the labou r f o r c e , or p a r t i c i p a t e i n i t , be understood. P o l i c i e s designed t o a l l e v i a t e the economic and s o c i a l burdens of t h i s demo-g r a p h i c t r e n d can o n l y be formulated through c a r e f u l a n a l y s i s of the f a c t o r s determining p o p u l a t i o n aging and e l d e r l y l a b o u r supply. I t i s the purpose of t h i s t h e s i s to focus a t t e n t i o n on the r e l a t i v e importance of the f a c t o r s which determine the l a b o u r f o r c e 3 p a r t i c i p a t i o n of the e l d e r l y or, c o n v e r s e l y , t h e i r d e c i s i o n to r e t i r e . Expressed as a problem, the t h e s i s w i l l attempt to answer the f o l l -owing q u e s t i o n : what f a c t o r s e x p l a i n the d e c i s i o n of the e l d e r l y t o p a r t i c i p a t e i n the l a b o u r f o r c e or withdraw from i t ? S t a t e d another way, the problem might be b e t t e r understood as: what are the main f a c t o r s which cause the e l d e r l y to r e t i r e , or contimue working past the age of 65? B. T h e s i s O b j e c t i v e s To p r o p e r l y address the problem posed and r e l a t e i t to the p r o f e s s i o n a l p l a n n i n g f i e l d the t h e s i s w i l l have three o b j e c t i v e s . (1) To analyse the demographic and l a b o u r f o r c e c h a r a c t e r -i s t i c s of Canada's e l d e r l y p o p u l a t i o n ( e l d e r l y b e i n g d e f i n e d as those persons 65 years of age and o l d e r ) . P r i o r t o e x p l a i n i n g the r e l a t i v e importance o f the f a c t o r s which l a y behind the e l d e r l y ' s d e c i s i o n to r e t i r e from the l a b o u r f o r c e i t i s h e l p f u l to understand the demographic and economic f a c t o r s which w i l l determine the e l d e r l y " s l a r g e p r o p o r t i o n a t e i n c r e a s e i n the p o p u l a t i o n , and how the e l d e r l y have h i s t o r i c a l l y f a i r e d as p a r t i c i p a n t s i n the l a b o u r f o r c e market. (2) To propose a model which e x p l a i n s the labour supply determinants of Canada's e l d e r l y p o p u l a t i o n . There i s a dearth of Canadian s t u d i e s which attempt to e x p l a i n the l a b o u r supply determinants of Canada's e l d e r l y . American s t u d i e s i n t h i s area are somewhat more numerous. U n f o r t u n a t e l y , however, most of these s t u d i e s l i m i t t h e i r a n a l y s i s to p a r t i c i p a n t s l e s s than 65 years o l d . In c o n j u n c t i o n with a review of the empir-i c a l and t h e o r e t i c a l s t u d i e s on l a b o u r supply determinants t h i s 4 thesis proposes a cross-sectional analysis of the labour supply determinants of Canada's e l d e r l y population. (3) To address the findings associated with objectives 1 and 2 and comment on the po l i c y implications each w i l l have for the professional planner and decision maker. It i s important to understand the problems planners and decision makers must cope with when faced with an aging society and one i n which a smaller proportion of the population contributes to the economic a c t i v i t y of the country. An understanding of the factors which explain the el d e r l y ' s decision to r e t i r e , or to continue participating-,, i n the labour force, can a s s i s t i n the formation of p o l i c i e s and programs designed to lessen the burden of an expanding aged and less economically productive proportion of the population. C. Methodology The methodology adopted to analyse what factors explain the decision of Canada's e l d e r l y to par t i c i p a t e i n the labour force or withdraw from i t i s that of constructing a;step-wise incl u s i o n least squares multiple l i n e a r regression model. The multiple regression technique was chosen for three main reasons: (1) The step-wise i n c l u s i o n l e a s t squares multiple l i n e a r regression technique provides an evaluative response to the various determinants included i n the explanatory equation of the labour supply of the e l d e r l y . Add-i t i o n a l l y , the technique allows tests of r e l i a b i l i t y and significance to be applied to the derived output. (2) The technique duplicates that used i n other analyses of labour supply determinants, hence, the results can be compared with those of previous studies. (3) Due to li m i t e d e x i s t i n g data sources ( p r i n c i p a l l y S t a t i s t i c s Canada Census data), as well as li m i t a t i o n s on time and funding necessary to conduct a separate data 5 c o l l e c t i o n survey, l e a s t squares m u l t i p l e l i n e a r r e g r e s s -i o n was the most thorough, r e l i a b l e and c o s t e f f i c i e n t method a v a i l a b l e . Data f o r three y e a r s — 1 9 6 1 , 1971, and 1976—were c o l l e c t e d from v a r i o u s sources f o r the v a r i a b l e s i n the model (see Chapter 3 and 4 f o r a thorough d i s c u s s i o n of the v a r i a b l e s i n the model and the data base from which they were d e r i v e d ) , p l a c e d on computer f i l e , and r e g r e s s e d w i t h the U.B.C. S t a t i s t i c a l Package f o r the S o c i a l Sciences (SPSS) v e r s i o n 8 computer "package" ( K i t a (1977); Nie e t a l . (1975)). In summary, Canada's p o p u l a t i o n i s aging and the p r o p o r t i o n of e l d e r l y w i l l continue to i n c r e a s e w e l l i n t o the next century. Along with t h i s t r e n d , the e l d e r l y are withdrawing from a c t i v e p a r t i c -i p a t i o n i n the labour f o r c e and r e l y i n g on e x i s t i n g p u b l i c support programs f o r t h e i r sustenance. These trends w i l l c r e a t e a number of economic and s o c i a l burdens f o r s o c i e t y i n the f u t u r e . I t i s e s s e n t i a l then, t h a t r e s e a r c h which works to understand the myster-i e s and consequences of these trends be conducted. Only through p r e s e n t r e s e a r c h can we expect to f i n d f u t u r e s o l u t i o n s to the burdens c r e a t e d . 6 Chapter 2 DEMOGRAPHIC AND ECONOMIC CHARACTERISTICS OF THE ELDERLY The p r o p o r t i o n of Canada's p o p u l a t i o n 65 and over i s i n c r e a s i n g year by year and i s expected to peak about the year 2031. At the same time, the labour market a c t i v i t y o f the e l d e r l y has been de-c r e a s i n g . T h i s chapter looks a t the trends and p a t t e r n s of the demographic and labour f o r c e p r o f i l e of Canada's e l d e r l y p o p u l a t i o n . A. The Aging of the P o p u l a t i o n P o p u l a t i o n aging i s the outcome of a complex i n t e r a c t i o n be-tween b i r t h , death, and net m i g r a t i o n . The absolute and r e l a t i v e p r o p o r t i o n o f Canada's e l d e r l y has i n c r e a s e d s t e a d i l y s i n c e 1851. Table I shows both the numerical and p r o p o r t i o n a t e growth i n Canada's e l d e r l y p o p u l a t i o n . In 1851 the p r o p o r t i o n o f e l d e r l y i n Canada was o n l y 2.7 perc e n t . By 1976 i t had i n c r e a s e d to 8.7 percent. T h i s s e c t i o n of the t h e s i s examines the b i r t h , death and net m i g r a t i o n r a t e s over the p e r i o d and d i s c u s s e s the i n f l u e n c e they have had i n i n c r e a s i n g the p r o p o r t i o n o f Canada's e l d e r l y . (i) F a c t o r s Accounting f o r an Aging P o p u l a t i o n Table I I shows the r a t e s o f b i r t h , death and n a t u r a l i n c r e a s e f o r d e c e n n i a l p e r i o d s between 1851 and 1971, and f o r quin q u e n n i a l p e r i o d s between 1951 and 1976. The b i r t h r a t e , the number of l i v e b i r t h s per 1,000 p o p u l a t i o n , has decreased from 45.2 i n the 1851-1861 d e c e n n i a l p e r i o d to 20.6 i n the 19 61-1971 d e c e n n i a l p e r i o d . The death r a t e , the number o f deaths per 1,000 p o p u l a t i o n , has decreased from 23.5 to 7.5 over the same p e r i o d o f time. An exam-7 Table I * Number and P r o p o r t i o n o f E l d e r l y i n T o t a l P o p u l a t i o n 1851-1976 TOTAL TOTAL PROPORTION YEAR POPULATION (000's) ELDERLY (000's) ELDERLY (%) 1851 2,436 65 2.7 1861 3,230 98 3.0 1871 3,689 135 3.7 1881 4,325 178 4.1 1891 4,833 220 4.6 1901 5,371 271 5.0 1911 7,207 336 4.7 1921 8,788 420 4.8 1931 10,377 576 5.6 1941 11,507 768 6.7 1951 14,009 1,086 7.8 1956 16,081 1,244 7.7 1961 18,238 1,391 7.6 1966 20,015 1,540 7.7 1971 21,568 1,744 8.1 1976 22,993 2,002 8.7 Excludes Newfoundland p r i o r t o 1951 Source: 1851-1891 found i n Denton e t a l . (1980) p. 10. 1901-1976 found i n S t a t i s t i c s Canada. Catalogue 98-800, 1979. 8 T a b l e I I R a t e s o f B i r t h , D e a t h , and N a t u r a l I n c r e a s e , Canada , 1851-1976 DECENNIAL NATURAL PERIOD BIRTHS/1000 POP. DEATHS/1000 POP. INCREASE 1851-1861 45.2 23.5 21.7 1861-1871 39.6 22.0 17.6 1871-1881 36.9 20.0 16.9 1881-1891 33.6 19.2 14.4 1891-1901 30.3 17.2 13.1 1901-1911 30.7 14.4 16.3 1911-1921 29.2 13.3 15.9 1921-1931 27.3 11.0 16.3 1931-1941 22.0 9.8 12.2 1941-1951 25.8 9.7 16.1 1951-1961 27.7 8.2 19.5 1961-1971 20 .6 7.5 13.1 (INQUENNIAL PERIOD 1951-1956 28.0 8.4 19.6 1956-1961 27.5 8.0 19.5 1961-1966 23.5 7.6 15.9 1966-1971 17.9 7.4 10.5 1971-1976 15.8 7.4 8.4 * E x c l u d e s N e w f o u n d l a n d p r i o r t o 1951 S o u r c e : Denton e t a l . (1980) p . 4 9 i n a t i o n o f both r a t e s i s i n s t r u c t i v e to understanding why the pro-p o r t i o n of e l d e r l y i n Canada i s growing. B i r t h r a t e s a t the t u r n o f the century were r e l a t i v e l y h i g h . Since t h a t time they have, o v e r - a l l , decreased as f e r t i l i t y r a t e s have decreased. T h i s i s s i g n i f i c a n t because people born around the t u r n of the century are now p a s t , a t , or approaching 65. The h i g h b i r t h r a t e s a t the t u r n o f the century and the aging of t h i s cohort has, today, r e s u l t e d i n an i n c r e a s e d p r o p o r t i o n of people 65 and over. Augmenting the consequence of h i g h t u r n of the century b i r t h r a t e s are d e c r e a s i n g death r a t e s . D e c l i n i n g death r a t e s s i n c e the t u r n of the century r e f l e c t s medical advances and improvements i n the o v e r - a l l standard of l i v i n g . The s i g n i f i c a n c e o f t h i s t r e n d i s t h a t people born around the t u r n of the century are l i v i n g l o n g e r . The average l i f e expectancy has i n c r e a s e d between 1931 and 1971 by over ten years from 61 to almost 73. The high b i r t h r a t e s around the t u r n of the century and the d e c l i n i n g r a t e s today, combined wi t h a d e c l i n i n g death r a t e have, together, been key c o n t r i b u t o r s to the growing p r o p o r t i o n of e l d e r l y i n Canada. A t h i r d f a c t o r which helps e x p l a i n the growing p r o p o r t i o n of e l d e r l y i n Canada i s the t r e n d i n the net m i g r a t i o n r a t e . Table I I I i l l u s t r a t e s t h i s t r e n d . Between 1901 and 1931 c l o s e to 3 m i l l i o n people immigrated to Canada. A f t e r 1931, the net m i g r a t i o n r a t e f e l l and between 1931-1941 became n e g a t i v e . The average age of immigrants between 1901 and 1931 ranged from 20 to 35. Most of these immigrants are today 65 and over and have i n c r e a s e d the p r o p o r t i o n of e l d e r l y i n the p o p u l a t i o n . 10 Table I I I Rates of Immigration, E m i g r a t i o n and Net M i g r a t i o n , Canada, 1851-1976* DECENNIAL PERIOD IMMIGRATION/1000 POPULATION EMIGRATION/1000 POPULATION NET MIGRATION 1851-1861 12.4 6.0 6.4 1861-1871 7.5 11.9 -4.4 1871-1881 8.7 9.7 -1.0 1881-1891 14.9 18 .1 -3.2 1891-1901 4.9 7.4 -2.5 1901-1911 24.6 11.8 12.8 1911-1921 17.5 13.6 3.9 1921-1931 12.6 12.2 0.4 1931-1941 1.4 3.2 -1.8 1941-1951 4.4 3.5 0.9 1951-1961 9.6 2.9 6.7 1961-1971 7.2 3.6 3.6 QUINQUENNIAL PERIOD 1951-1956 10.4 2.5 7.9 1956-1961 8.9 3.2 5.7 1961-1966 5.6 2.9 2.7 1966-1971 8.6 4.1 4.5 1971-1976 7.5 3.1 4.4 * Excludes Newfoundland p r i o r to 1951 Source: Denton e t a l . (1980) p. 8 11 More r e c e n t demographic trends w i l l a f f e c t the p r o p o r t i o n of e l d e r l y i n the f u t u r e . The o v e r - a l l decrease i n the b i r t h r a t e between 1851 and 1976 was not steady. Post World War I I b i r t h r a t e s rose d r a m a t i c a l l y i n what has come to be termed the "Baby Boom". The h i g h b i r t h r a t e s experienced i n the 1940s and 1950s i s s i g n i f -i c a n t i n terms of the p r o p o r t i o n of e l d e r l y i n Canada because by approximately 2010 the l a r g e number o f babies born d u r i n g the "Baby Boom" w i l l be r e a c h i n g 65 years of age. The aging of the baby boom p o p u l a t i o n i s , a f t e r the t u r n of the t w e n t y - f i r s t century, expected to d r a m a t i c a l l y i n c r e a s e the p r o p o r t i o n of Canada's e l d e r l y popu-l a t i o n . P o p u l a t i o n p r o j e c t i o n s e s t i m a t i n g the p r o p o r t i o n of e l d e r l y are based on a l t e r n a t i v e assumptions about f u t u r e r a t e s of b i r t h , death, and net m i g r a t i o n . Table IV shows f i v e p r o j e c t i o n s of the p r o p o r t i o n of the p o p u l a t i o n 6 5 and over. A d e t a i l e d d i s c u s s i o n of methodology used and assumptions made i n d e r i v i n g the p r o j e c t i o n s can be o b t a i n e d from Denton e t a l . (1980) pages 19-27. The assumptions u n d e r l y i n g each of the f i v e p r o j e c t i o n s i n Table IV are as f o l l o w s . P r o j e c t i o n P-01 assumes medium f e r t i l i t y , medium m o r t a l i t y , and medium net m i g r a t i o n . I t can be viewed as a " b a s e l i n e " p r o j e c t i o n . P r o j e c t i o n P-08 i s the "Rapid Growth" pro-j e c t i o n and assumes h i g h f e r t i l i t y , low m o r t a l i t y , and high net m i g r a t i o n . P r o j e c t i o n P-09 i s the "Slow Growth" p r o j e c t i o n which assumes low f e r t i l i t y , h i g h m o r t a l i t y , and low net m i g r a t i o n . P r o j e c t i o n P-10 can be viewed as an "Old P o p u l a t i o n " p r o j e c t i o n i n c l u d i n g u n d e r l y i n g assumptions of low f e r t i l i t y , low m o r t a l i t y , and medium net m i g r a t i o n . The f i n a l p r o j e c t i o n i n Table IV, P - l l , i s the "Young P o p u l a t i o n " p r o j e c t i o n which assumes h i g h f e r t i l i t y , 12 Table IV P r o j e c t e d P r o p o r t i o n s of P o p u l a t i o n 65 and Over, Canada, 1976-2051 YEAR P-01 P-08 P-09 P-10 P-11 1976 8.7 8.7 8.7 8.7 8.7 1981 9.4 9.3 9.5 9.6 9.2 1986 10.0 9.5 10.3 10.4 9.4 1991 10.7 9.9 11.3 11.6 9.7 1996 11.2 10.2 12.1 12.5 9.8 2001 11.5 10.2 12.6 13.2 9.7 2006 11.7 10.0 13.2 13.8 9.5 2011 12.4 10.2 14.5 15.2 9.6 2016 13.9 10.9 16.8 17.4 10.2 2021 15.4 11.6 19.5 20.0 10.9 2026 17.2 12.4 22.4 22.9 11.6 2031 18.3 12.7 24.8 25.3 11.8 2036 18.2 12.1 25.7 26.3 11.0 2041 17.5 11.2 25.8 26.6 10.0 2046 17.3 11.0 25.8 26.7 9.8 2051 17.6 11.4 25.8 26.7 10.3 Source: Denton e t a l . (1980) p. 32 13 h i g h m o r t a l i t y , and medium net m i g r a t i o n . Which p r o j e c t i o n w i l l prove most accurate i s d i f f i c u l t to p r e -d i c t . A l o t w i l l depend upon the f e r t i l i t y r a t e s o f women i n Canada. As can be seen from Table I I the most re c e n t b i r t h r a t e s , r e f l e c t e d i n the q u i n q u e n n i a l p e r i o d , have been s t e a d i l y d e c r e a s i n g . Another major determinant o f the accuracy o f the p r o j e c t i o n s i n Table IV w i l l be the f u t u r e s t a t e o f the medical f i e l d . Should a major med-i c a l breakthrough i n c r e a s e the average l i f e expectancy more Canadians w i l l be l i v i n g l onger and i n c r e a s i n g the p r o p o r t i o n o f e l d e r l y i n the p o p u l a t i o n . The t h i r d major f a c t o r a f f e c t i n g the accuracy o f the p r o j e c t i o n s i n Table IV i s net m i g r a t i o n . Future government immigration p o l i c y w i l l l a r g e l y determine the impact o f net m i g r a t i o n on the p r o p o r t i o n o f e l d e r l y i n Canada's p o p u l a t i o n . Because of t h i s , i t i s d i f f i c u l t t o p r e d i c t the i n f l u e n c e of f u t u r e net mi-g r a t i o n on the p r o p o r t i o n o f e l d e r l y . Given h i s t o r i c b i r t h , death and net m i g r a t i o n r a t e s a number of s c h o l a r s b e l i e v e the "Old P o p u l a t i o n " p r o j e c t i o n i s the most acc u r a t e i n c l u d i n g : Sheppard and Rix (1977); Science C o u n c i l o f Canada (1977); Stone (1978); Economic C o u n c i l o f Canada (1979); Weitz (1979); Rosenburg and Grad (1980); Stone and F l e t c h e r (1980); Denton and Spencer (1980); and, of course, Denton e t a l . (1980). I f p r o j e c t i o n s f o r e c a s t i n g an "Old P o p u l a t i o n " f o r Canada are accu-r a t e , the la b o u r supply i m p l i c a t i o n s can be s i g n i f i c a n t . I t i s important to examine the h i s t o r i c measure of the e l d e r l y ' s labour supply i n Canada. In so doing an i n s i g h t i n t o the f u t u r e labour supply a c t i v i t y o f the e l d e r l y may be gained. The f o l l o w i n g s e c t i o n w i l l look a t the h i s t o r i c labour f o r c e 14 p a r t i c i p a t i o n r a t e s of the e l d e r l y , and p r o j e c t i o n s o f dependency r a t i o s which may r e s u l t from the g r e a t e r p r o p o r t i o n o f e l d e r l y people i n the p o p u l a t i o n . B. H i s t o r i c Measures o f the E l d e r l y ' s Labour Supply and P r o j e c t e d  Dependency R a t i o s As d e f i n e d by S t a t i s t i c s Canada i n t h e i r census enumerations, the la b o u r f o r c e i n c l u d e s a l l the non-inmate p o p u l a t i o n 15 and over who, i n the week p r i o r to the enumeration, were e i t h e r employed or unemployed. Employed persons i n c l u d e d those people who, i n the week p r i o r t o enumeration, worked f o r pay or i n t h e i r own b u s i n e s s , farm or p r o f e s s i o n a l p r a c t i c e ; helped without pay i n a f a m i l y business or farm; or had a job from which they were t e m p o r a r i l y absent because of i l l n e s s , v a c a t i o n , l a b o u r d i s p u t e , t r a i n i n g course (with a job being h e l d f o r t r a i n e e ' s r e t u r n ) , bad weather, f i r e , p e r s o n a l r e -sons e t c e t e r a . Unemployed persons i n c l u d e d those people who, i n . the week p r i o r to enumeration, looked f o r work and were a v a i l a b l e to s t a r t work; were on temporary l a y - o f f , not exceeding 30 days, from a job t o which they expected t o r e t u r n ( e x c l u d i n g f u l l - t i m e s t u d e n t s ) ; or had d e f i n i t e plans to s t a r t a new job a t a f u t u r e date. A l l persons not c l a s s i f i e d as e i t h e r employed or unemployed are c o n s i d -ered o u t s i d e the labour f o r c e . People o u t s i d e the labour f o r c e i n c l u d e e l d e r l y people who are r e t i r e d . The labour f o r c e p a r t i c i -p a t i o n r a t e i s d e f i n e d by S t a t i s t i c s Canada as the percentage the t o t a l labour f o r c e (employed p l u s unemployed) forms of the p o p u l a t i o n 15 years o f age and o l d e r . Table V shows the l a r g e decrease i n both the e l d e r l y ' s l a b o u r f o r c e and the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e between 1921 Table V The Labour Force and P a r t i c i p a t i o n Rates for Canada's El d e r l y , 1921-1976* ELDERLY ELDERLY ELDERLY YEAR POPULATION LABOUR FORCE PARTICIPATION RATE (% 1921 406,000 137,000 33.7 1931 557,000 178,000 31.9 1941 742,000 202,000 27.2 1951 1,086,000 247,000 22.7 1956 1,244,000 258,000 20.7 1961 1,391,000 258,000 18.5 1966 1,540,000 251,000 16.3 1971 1,744,000 216,000 12.4 1976 2,002,000 178,000 8.9 *Excludes Newfoundland p r i o r to 1951 Source: 1921-1941 Denton and Ostry (1967). 1951-1976 Denton et a l . (1980) 16 and 1976. The e l d e r l y ' s t o t a l labour f o r c e grew from 137,000 i n 1921 to a peak i n 1961 of 258,000. Since 1961, however, the number of people 6 5 and over i n the labour f o r c e has s t e a d i l y decreased to 178,000 i n 1976 d e s p i t e t h e r e being over 2 m i l l i o n e l d e r l y people to draw on. The h i s t o r i c labour f o r c e p a r t i c i p a t i o n r a t e s of -.the e l d e r l y , the t o t a l e l d e r l y l a b o u r f o r c e as a percentage of the t o t a l e l d e r l y p o p u l a t i o n , has s t e a d i l y decreased from 33.7 p e r c e n t i n 1921 to 8.9 p e r c e n t i n 1976. C l e a r l y , a l a r g e m a j o r i t y of e l d e r l y per-sons i n Canada do not p a r t i c i p a t e i n the l a b o u r f o r c e . From the e a r l i e r d i s c u s s i o n of the i n c r e a s i n g p r o p o r t i o n of e l d e r l y i n the p o p u l a t i o n and from the d i s c u s s i o n above concerning the d e c l i n i n g e l d e r l y l a b o u r f o r c e and l a b o u r f o r c e p a r t i c i p a t i o n r a t e , Canada has seen, and can expect i n the f u t u r e , an i n c r e a s e i n the number of e l d e r l y who do not work. One measure of the burden p l a c e d on an economy by t h i s t r e n d can be d e r i v e d by examining h i s t o r i c and p r o j e c t e d dependency r a t i o s . Dependency r a t i o s can be d e f i n e d as the p r o p o r t i o n of people 0-14 p l u s people 65 and over to the 15-64 p r o p o r t i o n of the popu-l a t i o n . The dependency r a t i o r e l a t e s the more e c o n o m i c a l l y i n a c t i v e p r o p o r t i o n of the p o p u l a t i o n to the more e c o n o m i c a l l y a c t i v e propor-t i o n . I t i s b e l i e v e d t h a t the 15-64 c o h o r t supports the more dependent 0-14 and 65 and over c o h o r t s . C l e a r l y , dependency r a t i o s are an i n e x a c t measure of dependency s i n c e there are members of the 0-14 and, p a r t i c u l a r l y , the 65 and over c o h o r t who are e c o n o m i c a l l y a c t i v e and s e l f - s u p p o r t i n g . In a d d i t i o n , some members of the 15-64 cohort are not e c o n o m i c a l l y a c t i v e and dependent on those who a r e . N e v e r t h e l e s s , dependency r a t i o s p r o v i d e rough i n d i c a t o r s o f the 17 dependency burden i n a p o p u l a t i o n . A more p r e c i s e measure o f the dependency burden c r e a t e d by the i n c r e a s i n g p r o p o r t i o n of the e l d e r l y i n the p o p u l a t i o n and t h e i r d e c r e a s i n g l a b o u r f o r c e p a r t i c i p a t i o n i s the r a t i o of non-working e l d e r l y t o t o t a l labour f o r c e . Tables VI and VII look a t the dependency r a t i o s based on pop-u l a t i o n and l a b o u r f o r c e r e s p e c t i v e l y . Table VI r e v e a l s an over-a l l decrease i n the r a t i o of t o t a l dependents from a peak i n 1881 of 0.749 (approximately 75 people 0-14 and 65 and over per 100 persons i n the 15-64 cohort) to a low i n 1976 of 0.523. The decrease i n the r a t i o of t o t a l dependents r e s u l t s from the l a r g e decrease i n the r a t i o of young dependents and d i s g u i s e s the s i g n i f i c a n t i n c r e a s e i n the r a t i o o f o l d dependents. While the r a t i o of t o t a l dependents has decreased, the r a t i o of o l d dependents has i n c r e a s e d from 0.072 i n 1881 to 0.133 i n 1976. Table VII shows h i s t o r i c trends and p r o j e c t i o n s to the year 2000 of the r a t i o of non-working e l d e r l y t o the t o t a l l a b o u r f o r c e . The t a b l e d i s c l o s e s the i n c r e a s i n g burden p l a c e d on the l a b o u r f o r c e by e l d e r l y n o n - p a r t i c i p a n t s . The r a t i o has i n c r e a s e d v i r t u a l l y every census p e r i o d from a low i n 1921 of 0.081 to a h i g h i n 1976 of 0.177. P r o j e c t i o n s to the year 2000 p r e d i c t t h a t there w i l l be over 20 persons 65 and over o u t s i d e the labour f o r c e f o r every 100 persons i n the l a b o u r f o r c e . What i s even more s i g n i f i c a n t i s t h a t the l e a d i n g edge of people born d u r i n g the baby boom w i l l reach 65 a f t e r the year 2000. T h i s f a c t w i l l probably r e s u l t i n even h i g h e r r a t i o s of non-working e l d e r l y t o the t o t a l labour f o r c e a f t e r the year 2000. In summary, Canada's p o p u l a t i o n i s aging. A g r e a t e r p r o p o r t i o n T a b l e V I * Young, O l d , and T o t a l Dependency R a t i o s , Canada, 1881-1976 RATIO OF YOUNG RATIO OF OLD RATIO OF YEAR DEPENDENTS (0-14) DEPENDENTS (65+) TOTAL DEP: 1881 .677 .072 .749 1891 .615 .077 .692 1901 .568 .083 .651 1911 .529 .075 .603 1921 .566 .079 .644 1931 .503 .088 .592 1941 .424 .102 .526 1951 .490 .125 .615 1961 .581 .131 .712 1966 .555 .130 .684 1971 .475 .130 .604 1976 .391 .133 .523 * E x c l u d e s Newfoundland p r i o r t o 1951 Source: K a l b a c h and McVey (1979) p. 171 19 T a b l e V I I The Burden o f the Noh-•Working E l d e r l y , Canada, 1921-2000* YEAR NON-WORKING ELDERLY (000's) TOTAL LABOUR FORCE (000's) RATIO 1921 269 3,302 .081 1931 379 4,042 .093 1941 540 4,652 .116 1951 839 5,232 .160 1956 986 5,794 .170 1961 1,133 6,510 .174 1966 1,289 7,450 .173 1971 1,528 8,649 .176 1976 1,824 10,308 .177 1980 .188 1985 .192 1990 .208 2000 .208 * E x c l u d e s Newfoundland p r i o r t o 1951 Source: 1921-1941 i n Denton and O s t r y (1967) . 1951-1976 i n Denton e t a l . (1980). 1980-2000 i n W e i t z (1979). 20 of the t o t a l p o p u l a t i o n i s a t , or over, 65 years of age than a t any o t h e r time. I t i s expected t h a t the p r o p o r t i o n of e l d e r l y w i l l i n c r e a s e i n t o the next century u n t i l a f t e r people born d u r i n g the 1940s and the 1950s baby boom p e r i o d reach 65 years of age. In a d d i t i o n , the e l d e r l y are r e d u c i n g t h e i r amount of labour supply. I t i s p r e d i c t e d t h a t the r a t i o of non-working e l d e r l y to the t o t a l l a b o u r f o r c e w i l l i n c r e a s e w e l l i n t o the next century. The i m p l i -c a t i o n s of these trends w i l l be d i s c u s s e d i n Chapter 5. In l i g h t of the f a c t t h a t the p r o p o r t i o n of e l d e r l y i n the p o p u l a t i o n has grown, and i s expected to continue to grow i n t o the t w e n t y - f i r s t century, and t h a t the e l d e r l y 1 s l a b o u r f o r c e p a r t i c i -p a t i o n has decreased, and i s expected to continue to decrease i n t o the next century, i t i s important to examine the l a b o u r supply determinants of the e l d e r l y . The f o l l o w i n g chapter reviews labour supply theory and the l i t e r a t u r e on the f a c t o r s which i n f l u e n c e ;the e l d e r l y ' s d e c i s i o n t o remain i n , or withdraw from, the l a b o u r f o r c e . Furthermore, Chapter 3 p r e s e n t s a model designed to e x p l a i n the determinants of the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n i n Canada. 21 Chapter 3 A MODEL OF THE LABOUR SUPPLY DETERMINANTS OF THE ELDERLY A. The E l d e r l y and the Labour Supply T h i s chapter reviews labour supply theory and the l i t e r a t u r e on the labour supply determinants of the e l d e r l y . In a d d i t i o n , the chapter w i l l propose a model to e x p l a i n the labour supply determinants of the e l d e r l y i n Canada. (i) Labour Supply Theory Labour supply i s t r a d i t i o n a l l y regarded as a composite of a t l e a s t f o u r dimensions (Samuelson and S c o t t , 1980): (1) P o p u l a t i o n (2) P r o p o r t i o n of the p o p u l a t i o n a c t u a l l y i n the l a b o u r f o r c e , or l a b o u r f o r c e p a r t i c i p a t i o n r a t e (3) Average number of hours worked per week o r year by workers (4) Q u a l i t y and q u a n t i t y of e f f o r t and s k i l l t h a t workers pr o v i d e Once the p o p u l a t i o n has been analyzed i n terms of the t o t a l p o p u l a t i o n of working age, or once the a v a i l a b l e work f o r c e has been determined, v a r i o u s i n d i v i d u a l and household consumption components come i n t o e f f e c t which attempt to e x p l a i n the amount o f lab o u r s u p p l i e d by an i n d i v i d u a l . The b a s i c t h e o r e t i c a l framework developed i n 193 0 by economist L i o n e l Robbins and f u r t h e r developed by John Hicks (1939), which helps e x p l a i n the i n d i v i d u a l components o f labour supply, i s the w o r k - l e i s u r e choice model. The w o r k - l e i s u r e model d e p i c t s an i n d i v i d u a l as a c o n s t r a i n e d u t i l i t y maximizer where, s u b j e c t to h i s or her p o t e n t i a l income c o n s t r a i n t , he or she w i l l o p t i m i z e the 22 d i v i s i o n of time a v a i l a b l e between work and l e i s u r e . The d i v -i s i o n of a v a i l a b l e time i s c o n d i t i o n e d by the i n d i v i d u a l ' s wage r a t e and h i s s u b j e c t i v e p r e f e r e n c e f o r the consumption of l e i s u r e , where " l e i s u r e " i s d e f i n e d as non-labour market a c t i v i t i e s which i n c l u d e household a c t i v i t i e s , investment i n human c a p i t a l , and pure l e i s u r e a c t i v i t i e s . The f o l l o w i n g f i g u r e s g r a p h i c a l l y d e s c r i b e the w o r k - l e i s u r e model. In F i g u r e I (a) the i n d i v i d u a l ' s o p t i m a l amount o f income and l e i s u r e i s d e p i c t e d . The . v e r t i c a l a x i s (OY) r e p r e s e n t s income, the h o r i z o n t a l a x i s (OT ) time. The p o i n t T i s the maximum max ^ max amount o f time a v a i l a b l e to the i n d i v i d u a l . From t h i s stock of time the i n d i v i d u a l p r o p o r t i o n s both time spent i n l e i s u r e (measured from l e f t to r i g h t ) and work (measured from r i g h t to l e f t ) . The amount o f time p r o p o r t i o n e d between work and l e i s u r e i s determined by the i n d i v i d u a l ' s p o t e n t i a l income c o n s t r a i n t , r e p r e s e n t e d by the l i n e Y__V, and the i n d i v i d u a l ' s i n d i f f e r e n c e curves, U-, , U 0, and max x z U^. The i n d i f f e r e n c e curve r e p r e s e n t s equal u t i l i t y , o r w e l f a r e , between income and l e i s u r e . The s l o p e s of the i n d i f f e r e n c e curves e x h i b i t d i m i n i s h i n g m arginal r a t e s of s u b s t i t u t i o n between income and l e i s u r e , i n o t h e r words, the more income an i n d i v i d u a l has r e l a t i v e t o l e i s u r e the lower i s the r e l a t i v e s u b s t i t u t i o n v alue of income. The same would apply to an i n d i v i d u a l who had more l e i s u r e r e l a t i v e t o income r e s u l t i n g i n a lower r e l a t i v e s u b s t i t u t i o n v alue f o r l e i s u r e . The ' r a t i o n a l ' i n d i v i d u a l w i l l always attempt to move to the h i g h e s t i n d i f f e r e n c e curve p o s s i b l e l i m i t e d by h i s or her p o t e n t i a l income c o n s t r a i n t . The ' p o t e n t i a l ' income c o n s t r a i n t i s so named because i t r e p r e s e n t s the v a r y i n g p o t e n t i a l amounts of 23 F i g u r e i T h e I n d i v i d u a l L a b o u r S u p p l y F u n c t i o n I N C O M E I — L e i s u r e » ~ * - W o r k L E I S U R E 0 income the i n d i v i d u a l can r e c e i v e by s u b s t i t u t i n g l e i s u r e f o r work a t the market wage r a t e . The market wage r a t e i s d e p i c t e d by the slope Z, and T V denotes the amount of non-labour income a v a i l a b l e c max to the i n d i v i d u a l . The amount of labour s u p p l i e d by an i n d i v i d u a l i s determined by the p o i n t a t which the i n d i v i d u a l maximizes h i s or her u t i l i t y s u b j e c t to the c o n s t r a i n t s of h i s o r her labour market e a r n i n g s . T h i s p o i n t i s d e p i c t e d i n F i g u r e I (a) as the e q u i l i b r i u m p o i n t E Q where u t i l i t y curve U„ i s tangent to Y V. The amount o f labour A in 3.x s u p p l i e d i s T T +, the i n d i v i d u a l ' s income i s Y +, and the amount max * * of l e i s u r e consumed i s OT*. The ' r a t i o n a l ' i n d i v i d u a l w i l l not work a t the lower i n d i f f e r e n c e curve U^. T h i s i s apparent s i n c e by working T T, the i n d i v i d u a l d e r i v e s an income o f Y,. At t h i s ^ max 1 1 p o i n t the wage r a t e exceeds the marginal r a t e o f s u b s t i t u t i o n , hence, the i n d i v i d u a l can i n c r e a s e h i s u t i l i t y by consuming more hours of work and l e s s o f l e i s u r e . By working T T„ the i n d i v i d u a l d e r i v e s J max 2 an income of Y2 and the marginal r a t e o f s u b s t i t u t i o n exceeds the wage r a t e . Again, the i n d i v i d u a l can i n c r e a s e h i s u t i l i t y by con-suming more hours o f l e i s u r e and l e s s o r work. As Robbins (1930) has p o i n t e d out, the w o r k - l e i s u r e choice model can be used to d e r i v e an i n d i v i d u a l ' s labour supply schedule; t h a t i s , the amount of work o f f e r e d a t v a r i o u s wage r a t e s . F i g u r e I (b) shows what happens to the i n d i v i d u a l ' s e q u i l i b r i u m when the wage r a t e r i s e s from $3 per hour, to $5 per hour, to $7 per hour. Income, the v e r t i c a l a x i s , i s measured i n income per day w h i l e work and l e i s u r e , the h o r i z o n t a l a x i s , i s measured i n u n i t s o f hours per day. L i n e WnV d e p i c t s a $3 per hour wage r a t e and E_ i s the p o i n t 25 of u t i l i t y maximization g i v e n UQ as the h i g h e s t a t t a i n a b l e i n d i f f e r e n c e curve. At E Q the i n d i v i d u a l s u p p l i e s 8 hours of work and earns $24. With a wage i n c r e a s e to $5 per hour, represented by the l i n e W-^ V, the u t i l i t y maximizing e q u i l i b r i u m p o i n t d e p i c t s the i n d i v i d u a l s u p p l y i n g 12 hours of work and e a r n i n g $60. In t h i s case the s u b s t i t u t i o n e f f e c t o f income r e l a t i v e to l e i s u r e i s g r e a t -e r than the income e f f e c t and, t h e r e f o r e , the i n d i v i d u a l s u b s t i t u t e s away from l e i s u r e and i n c r e a s e s the hours of labour s u p p l i e d . When the wage r a t e i s i n c r e a s e d to $7 per hour, l i n e W2V, the new e q u i l i b -rium E 2 , shows the i n d i v i d u a l i n c r e a s e s h i s wage to $70 but decreases h i s supply of labour to 10 hours. T h i s case i s i l l u s t r a t i v e of the income e f f e c t . As income r i s e s , i n d i v i d u a l s w i l l want to consume more normal goods, o f which l e i s u r e i s one. The s u b s t i t u t i o n e f f e c t causes i n d i v i d u a l s to o f f e r more work Xless l e i s u r e ) and the income e f f e c t causes i n d i v i d u a l s to c u t back on labour supply (more l e i s u r e ) . F i g u r e I (c) shows the i n d i v i d u a l ' s labour supply schedule d e r i v e d from F i g u r e I (b). I t i s important to note t h a t the supply curve becomes backward bending as the wage r a t e i n c r e a s e s . T h i s i s i n d i c a t i v e of the dominance of the income e f f e c t over the s u b s t i t u t i o n e f f e c t . Economists g e n e r a l l y agree t h a t F i g u r e I (c) i s a reasonably c l o s e approximation o f the t h e o r e t i c a l labour supply f o r most i n d i v i d u a l s ( F l e i s h e r (1970)). At low wage r a t e s i n d i v i d -u a l s have a host o f unmet d e s i r e s . A h i g h e r wage r a t e induces these i n d i v i d u a l s t o work more to be able to meet t h e i r d e s i r e s . At a hi g h wage r a t e many unmet d e s i r e s are f u l f i l l e d and the a d d i t i o n a l income i s used to purchase more l e i s u r e . 26 The b a s i c w o r k - l e i s u r e c h o i c e model can be extended to analyse e f f e c t s of an i n c r e a s e i n V, the non-labour income o f an i n d i v i d u a l . Non-labour income i n c r e a s e s i n c l u d e bequests, w i n d f a l l earnings from l o t t e r i e s o r gambling, s a l e o f stocks or bonds and t r a n s f e r payments such as s o c i a l insurance b e n e f i t s . The s o c i a l insurance program which the l i t e r a t u r e r e v e a l s has had a s i g n i f i c a n t impact on the e l d e r l y ' s d e c i s i o n to p a r t i c i p a t e i n the labour f o r c e i s the pension program. Since the f o l l o w i n g s e c t i o n i n t h i s chapter reviews the l i t e r a t u r e on pension programs and t h e i r e f f e c t on the e l d e r l y ' s labour supply, the purpose here i s to d i s c u s s the t h e o r e t i c a l labour supply model as i t a p p l i e s to an i n c r e a s e i n non-labour income from a source such as a pension p l a n . I t i s impor-t a n t to remember t h a t most o f the authors o f the pension r e l a t e d l i t e r a t u r e reviewed d e r i v e t h e i r t h e o r e t i c a l o r i g i n from the b a s i c w o r k - l e i s u r e choice model. F i g u r e I I (a) shows the e f f e c t an i n c r e a s e i n non-labour i n -come, d e r i v e d from a pension p l a n , can have on an i n d i v i d u a l ' s l a b o u r supply. The example assumes t h a t the i n d i v i d u a l q u a l i f i e s f o r the pension payment and he i s not s u b j e c t to a r e t i r e m e n t t e s t d e f i n e d as an earnings r e l a t e d r e d u c t i o n i n t o t a l pension payment. The more one works and earns a f t e r q u a l i f y i n g f o r the pension, the l e s s the pension payment. Canada's Old Age S e c u r i t y program e l i m i n a t e d i t s r e t i r e m e n t t e s t i n 1975. F i g u r e I I (a) i n d i c a t e s t h a t the pre non-l a b o u r income i n c r e a s e e q u i l i b r i u m , Eg, has been s h i f t e d outwards to E-j^. The i n d i v i d u a l has achieved a h i g h e r i n d i f f e r e n c e l e v e l as a r e s u l t of the pension p l a n . H i s income has i n c r e a s e d from Yg to Y, and a t E, the amount of l a b o u r he o f f e r s w i l l f a l l from T L„ to 1 1 max 0 Figure II 27 The E f f e c t of Pension Plans on Individual Labour Supply INCOME . 28 T L, . Depending on the i n d i v i d u a l ' s p r e f e r e n c e s h i s new u t i l i t y max 1 c J f u n c t i o n c o u l d be a t i n which case he has completely r e t i r e d , or at E 2 i n which case he o f f e r s the same amount of lab o u r as a t E Q . The pure income e f f e c t of the pension t r a n s f e r g e n e r a l l y tends to encourage r e c i p i e n t s to reduce the hours of work they o f f e r , or r e t i r e completely. F i g u r e I I (b) g r a p h i c a l l y d i s p l a y s the case where an i n d i v i d u a l r e c e i v e s a pension, but i t i s s u b j e c t to a f u l l r e t i r e m e n t t e s t . In o ther words, the pension r e c i p i e n t i s r e q u i r e d to g i v e up $1 of pension f o r every $1 earned. Such a pension p l a n encourages the r e c i p i e n t to r e t i r e completely, move to p o i n t V ^ , s i n c e up to p o i n t the i n d i v i d u a l r e c e i v e s the same income whether he works or r e t i r e s . Pension p l a n s which have p a r t i a l r e t i r e m e n t t e s t s are d e p i c t e d i n F i g u r e I I ( c ) . The p o r t i o n of the budget c o n s t r a i n t l i n e VQV^ i n d i c a t e s the pension b e n e f i t s payable upon complete r e t i r e m e n t ; income i s a t Y, and l e i s u r e i s a t OT . L i n e V,A shows t h a t the . 1 max 1 i n d i v i d u a l can work T L, w i t h an income of Y^Y, and s t i l l earn max A A 1 the maximum pension. At l i n e AB however, the i n d i v i d u a l w i l l r e c e i v e o n l y $0.50 pension f o r every $1 of l a b o u r market earnings between Y_.Y._ f o r the a d d i t i o n a l work L^L^.. At l i n e BC the pension i s s u b j e c t to the f u l l r e t i r e m e n t t e s t . Any a d d i t i o n a l earnings generated by i n c r e a s e d work L_,L i s s u b j e c t to a 100 p e r c e n t tax pension b e n e f i t s . At p o i n t C the i n d i v i d u a l r e c e i v e s no pension on b e n e f i t s . Any a d d i t i o n a l work, r e p r e s e n t e d by L cO, would y i e l d an a d d i t i o n a l income along budget c o n s t r a i n t l i n e CY . The work max i n c e n t i v e e f f e c t s of budget c o n s t r a i n t l i n e V,ABCY a c t to 1 max 2 9 encourage retirement i n two ways. F i r s t , the s h i f t of the budget constraint outwards from the i n i t i a l , V„Y , has an income e f f e c t 0 max which encourages the purchase of more l e i s u r e , or retirement. Second, the slope of V^ABCY i s , everywhere, equal to or less than the i n i t i a l constraint meaning the opportunity cost of l e i s u r e i s reduced. This encourages the substitution of l e i s u r e for work. A pension with a p a r t i a l retirement t e s t s i m i l a r to the one depicted i n Figure II (c) has both an income and substitution e f f e c t which work to encourage early retirement. The simple work-leisure model i s fundamentally designed to theorize the i n d i v i d u a l ' s welfare maximization between work and his preference for l e i s u r e or income (also interpreted as including market goods, which the income earned purchases). In terms of i n d i v i d u a l labour supply i t predicts that the hours of labour offered w i l l increase with a r i s e i n the wage rate (to a point, at which i t becomes backward bending), decreases with a r i s e i n non-labour income, and be highly dependent on the individual's preference for l e i s u r e over goods. The work-leisure model i s not without i t s c r i t i c i s m s , however. One of i t s major weaknesses i s that i t interprets the decision to p a r t i c i p a t e i n the labour force s o l e l y as an individual's decision, and h i s a l l o c a t i o n of time between only market work and l e i s u r e . In addition, the work-leisure model tends to be s t a t i c . I t does not view the time a l l o c a t i o n decisions made within the context of the individual's age or household's stage i n the l i f e - c y c l e . In r e a l i t y , an i n d i v i d u a l ' s decision to p a r t i c i p a t e i n the labour force i s influenced by the individual's desires and prefer-3 0 ences as w e l l as the needs and w e l f a r e o f the f a m i l y u n i t of which he i s a member. The d e c i s i o n to work i s made j o i n t l y between the members of the household based on a household u t i l i t y f u n c t i o n which i s a composite o f each f a m i l y member's i n d i v i d u a l u t i l i t y f u n c t i o n . In r e a l i t y too, the a l l o c a t i o n of time i s not simply between market work and l e i s u r e , but a d i v i s i o n o f time between market work, pure l e i s u r e , and non-market work. The a d d i t i o n o f non-market work s u b s t a n t i a l l y i n c r e a s e s the complexity o f the simple model. A c t i v i t i e s such as i n v e s t i n g i n human c a p i t a l and household p r o d u c t i o n a c t i v i t i e s c r e a t e an u n l i m i t e d number of interdependent time consuming a c t i v i t i e s and v a r i a b l e p r e f e r e n c e s f o r these a c t i v i t i e s . The d e c i s i o n to work, o r not to work, i s i n f l u e n c e d by the age, or stage i n the l i f e - c y c l e o f the i n d i v i d u a l i n the household. As the i n d i v i d u a l i n the household ages he progresses through d i f f e r e n t economic, s o c i a l , and p h y s i o l o g i c a l stages which i n f l u e n c e s and determines h i s consumption p a t t e r n s and labour supply a c t i v i t i e s . When the i n d i v i d u a l reaches the ' e l d e r l y ' stage i n h i s l i f e - c y c l e h i s economic s t a t u s , hence h i s a b i l i t y t o r e t i r e from the labour f o r c e , i s l a r g e l y the cummulative consequence o f a myriad of resource a l l o c a t i o n c h o i c e s made throughout the stages o f h i s l i f e - c y c l e . Choices which concern e d u c a t i o n , on-the-job t r a i n i n g , work, l e i s u r e , h e a l t h care, consumption, saving and investment. The e v o l u t i o n o f a model which transcends the c r i t i c i s m s of the b a s i c w o r k - l e i s u r e framework, and i n c l u d e s a u t i l i t y maximizing l i f e -c y c l e household d e c i s i o n making component with a t h i r d v e c t o r of time a l l o c a t i o n , can be t r a c e d through the p i o n e e r i n g work o f Gary 31 Becker (1965) on time a l l o c a t i o n w i t h i n the household, and P. C. G l i c k (1947, 1955, 1977) on the l i f e - c y c l e of the f a m i l y . However, i t i s o n l y r e c e n t l y t h a t economists i n t e g r a t e d time a l l o c a t i o n theory and l i f e - c y c l e t h e o r y to c r e a t e u t i l i t y maximizing models o f c h o i c e between market work, non-market work (which i n c l u d e s investment i n human c a p i t a l and household p r o d u c t i o n a c t i v i t i e s ) , and l e i s u r e . These models have been proposed by James Heckman (1976), A l i Sadik and Johnson (1976), A l a n B l i n d e r and Yoram Weiss (1976), G i l b e r t Ghez and Becker (1975), and Frank S t a f f o r d and Paula Stephan (1972). The p r o f i l e s of i n d i v i d u a l , or household, l a b o u r supply and l e i s u r e i n these t h r e e - a c t i v i t y l i f e - c y c l e models are determined by the i n d i v i d u a l ' s , or household's, wealth of a s s e t s and human c a p i t a l , r a t e s o f time p r e f e r e n c e , human c a p i t a l d e p r e c i a t i o n r a t e s , and i n t e r e s t r a t e s on investments i n c l u d i n g r a t e s of r e t u r n on i n v e s t -ment i n human c a p i t a l . F i g u r e s I I I (a) and (b) d e p i c t the t y p i c a l consumer 'Value of L e i s u r e 1 and 'Measured Hours of Work 1 p r o f i l e s r e s p e c t i v e l y as p r o v i d e d by the t h r e e - a c t i v i t y l i f e - c y c l e models (see Heckman, 1976) . At r e l a t i v e l y e a r l y stages i n the l i f e - c y c l e both the v a l u e o f l e i s u r e and the supply o f l a b o u r r i s e . T h i s r e f l e c t s the dominance of the s u b s t i t u t i o n e f f e c t of i n c r e a s e d e a r n i n g power. As an i n d i v i d u a l , or household, reaches the l a t e r stages of the l i f e - c y c l e sequence e a r n i n g power peaks and the income e f f e c t begins to dominate. L e i s u r e becomes more v a l u a b l e so l e i s u r e i s s u b s t i t u t e d f o r work. I t i s important to remember t h a t the p r o f i l e s d e p i c t e d i n F i g -ure I I I are o n l y two o f a number of consumer c h o i c e p r o f i l e s which are a l l interdependent and determined by a complex i n t e r a c t i o n of 32 F i g u r e i l l Work and L e i s u r e P r o f i l e s of the Three A c t i v i t y L i f e - C y c l e Models Measured Hours of Work (b) 0 AGE T (Assuming wage growth becomes s u f f i c i e n t l y s m a l l so t h a t hours peak) 33 consumer c h o i c e s made throughout the l i f e - c y c l e . The value of the t h r e e - a c t i v i t y l i f e - c y c l e model i s t h a t i t p r o v i d e s a s i g n i f i c a n t l y more r e a l i s t i c model of the l a b o u r supply d e c i s i o n . However, as Cain and Dooley (1976) d i s c u s s below, i t s disadvantage l i e s i n i t s overcomplexity to the extent t h a t e x i s t i n g data does not s a t i s f y the model's requirements. , The obvious b e n e f i t s of these t h e o r e t i c a l developments are g r e a t e r r i g o r , the r e s o l u t i o n of some a m b i g u i t i e s , and the s a t i s f a c t i o n o f extending the theory to new problems. One of the c o s t s i s t h a t the requirements f o r e s t i m a t i n g these household models cannot, s t r i c t l y speaking, be met with a v a i l a b l e data: the e m p i r i c a l models are i n e v i t a b l y under-i d e n t i f i e d , (p. S180) The major purpose of t h i s s e c t i o n i s to review l a b o u r supply theory. Before l e a v i n g t h i s s e c t i o n , however, i t i s important to t h i s study, and to understand an a d d i t i o n a l l i m i t a t i o n o f the simple w o r k - l e i s u r e model, t h a t two concepts o f the e f f e c t s o f changes i n labour demand be reviewed. These concepts are the discouraged worker h y p o t h e s i s , and the added worker h y p o t h e s i s . The simple w o r k - l e i s u r e model assumes an i n f i n i t e l y e l a s t i c demand f o r l a b o u r . T h i s assumption n e g l e c t s the a f f e c t s o f unemployment on lab o u r supply. In r e a l i t y , the economy does not expand to absorb every e n t r a n t i n t o the l a b o u r f o r c e . I n e v i t a b l y , some p a r t i c i p a n t s i n the l a b o u r f o r c e are unemployed. The unem-ployment r a t e , i n p a r t , c o n d i t i o n s the s i z e o f the labour f o r c e . I t does so i n two ways. F i r s t l y , the d i s c o u r a g e d worker h y p o t h e s i s holds t h a t the s i z e o f the l a b o u r f o r c e decreases i n p e r i o d s of h i g h unemployment. People l o o k i n g f o r work tend to become discouraged i n t h e i r p u r s u i t 34 o f employment and drop out of the labour f o r c e . In the case of the e l d e r l y , the' presence o f h i g h unemployment r a t e s can cause complete r e t i r e m e n t from the l a b o u r f o r c e . Secondly, the added worker hy p o t h e s i s holds t h a t the s i z e of the labour f o r c e i n c r e a s e s i n p e r i o d s o f h i g h unemployment. Should the primary breadwinner i n the household become unemployed other members of the household enter, r e e n t e r , o r remain i n the labour f o r c e to supplement household income. I f the added worker hypothesis holds true the l a b o u r supply o f e l d e r l y workers would i n c r e a s e i n p e r i o d s of h i g h unemployment as e l d e r l y f a m i l y members re e n t e r e d , or r e j e c t e d r e t i r e m e n t and remained i n , the l a b o u r f o r c e . The d i s c o u r a g e d worker and added worker e f f e c t s operate s i m u l -t a n e o u s l y and i n o p p o s i t e d i r e c t i o n s on the household labour supply. Which e f f e c t predominates i s s t i l l a c o n t e n t i o u s i s s u e i n the l i t e r a t u r e on o v e r - a l l l a b o u r f o r c e p a r t i c i p a t i o n . Most American e m p i r i c a l s t u d i e s support the dominance of the d i s c o u r a g e d worker e f f e c t ; however, Mincer's (1962) work supports the dominance of the added worker e f f e c t . Canadian s t u d i e s are c o n s i d e r a b l y l e s s con-c l u s i v e . Time s e r i e s s t u d i e s by P r o u l x (1969), O f f i c e r and Anderson (1969), Davis (1971), Swidinsky (1973), Donner and Lazar (1974), and Swan (1974) f i n d the added worker e f f e c t dominates i n i t i a l l y with the d i s c o u r a g e d worker e f f e c t becoming more predominant over time. C r o s s - s e c t i o n s t u d i e s are e q u a l l y as i n c o n c l u s i v e . S t u d i e s by Ostry (1968), and Spencer and Featherstone (1970) support the added worker e f f e c t while Swidinsky (1973), p r o v i d e s evidence s u p p o r t i n g the d i s -couraged worker e f f e c t . Canadian s t u d i e s based on more c u r r e n t data tend t o support the discouraged worker hy p o t h e s i s (Spencer 35 (1973), Skoulas (1974), and Gunderson (1977)). In summary then, American r e s e a r c h supports the dominance of the discouraged worker e f f e c t , w h ile o n l y Canadian r e s e a r c h based on c u r r e n t data agrees w i t h the American f i n d i n g s . Labour supply theory i s an a b s t r a c t i o n of r e a l i t y . Much of the theory i s l i m i t e d by assumptions and c o n d i t i o n s . Only through e m p i r i c a l i n v e s t i g a t i o n based on the a p p l i c a t i o n o f e x t e n s i v e l y c o l l e c t e d data can estimates of the magnitude and r e l i a b i l i t y o f the theory be deduced. The f o l l o w i n g s e c t i o n reviews the l i t e r a t u r e on the labour supply determinants o f the e l d e r l y . The s t u d i e s reviewed merge labour supply theory and t h e o r e t i c a l models w i t h a v a i l a b l e data t o d e r i v e the determinants of,.the e l d e r l y ' s l a b o u r supply. ( i i ) The E l d e r l y ' i s Labour Supply Determinants The f a c t o r s which i n f l u e n c e the e l d e r l y ' s d e c i s i o n t o p a r t i c i -pate i n the labour f o r c e , or r e t i r e from i t , can be b r o a d l y c a t e g o r i z e d i n t o f i v e groups (Clark and Spengler (1980)): (1) Pension r e l a t e d f a c t o r s (2) Health r e l a t e d f a c t o r s (3) Economic f a c t o r s (4) Other f i n a n c i a l f a c t o r s (5) Family and i n d i v i d u a l f a c t o r s T h i s s e c t i o n w i l l comment on the l i t e r a t u r e s p e c i f i c t o each of the f i v e groups of f a c t o r s which determine the e l d e r l y ' s labour supply. U n f o r t u n a t e l y , the l i t e r a t u r e reviewed i s based almost e x c l u s i v e l y on U.S. data s e t s , f u r t h e r p o i n t i n g to the need f o r Canadian r e s e a r c h i n t h i s area. 36 (a) Pension R e l a t e d F a c t o r s In Canada, the e l d e r l y r e c e i v e t h e i r p u b l i c pension incomes from the•Old Age S e c u r i t y (O.A.S.), Guaranteed Income Supplement (G.I.S.), and Canada Pension P l a n (CP.P.) programs. I t i s beyond the scope of t h i s t h e s i s to analyse and d i s c u s s Canada's pension programs. Readers i n t e r e s t e d i n such an a n a l y s i s should r e f e r to The Retirement Income System i n Canada (1979); and^the:Economic . C o u n c i l of Canada (19 79) . The p r i v a t e pension system i n Canada i s d i s c u s s e d i n Pesando (1979) . The importance of pension incomes as a determinant of the e l d e r l y ' s l a b o u r supply i s based on the income e f f e c t r e s u l t i n g from an i n c r e a s e i n non-labour income (Figure II)'. S t u d i e s of pensions as a determinant of the e l d e r l y ' s l a b o u r supply have g e n e r a l l y been s u p p l i e d w i t h i n the l a s t twenty y e a r s . Margaret Gordon (196 3a; 1963b), u s i n g the r a t i o of r e t i r e m e n t income t o t o t a l income as as independent v a r i a b l e , d e r i v e d a s i g n i f i c a n t i n v e r s e c o r r e l a t i o n o f (-0.83) i n her a n a l y s i s of the l a b o u r f o r c e p a r t i c i p a t i o n of males 65 and over i n f o u r t e e n i n d u s t r i a l n a t i o n s . A study by Pechman e t a l . (1968) u s i n g 1960 data from nineteen c o u n t r i e s , and the r a t i o of average s o c i a l s e c u r i t y b e n e f i t s as a percentage o f average manufacturing earnings f o r an independent v a r i a b l e , found t h a t a r i s e i n one percentage p o i n t i n per c a p i t a s o c i a l s e c u r i t y payments would l e a d to a decrease i n the l a b o u r f o r c e p a r t i c i p a t i o n r a t e o f men 65 years and over o f f o u r - t e n t h s of one p e r c e n t . Using the 1959 r a t i o of o l d age b e n e f i t s to median earn-ings of male members of the e x p e r i e n c e d c i v i l i a n l a b o u r f o r c e as h i s independent v a r i a b l e L o w e l l Gallaway (1971) o b t a i n e d a s i g n i f i c a n t i n v e r s e r e l a t i o n s h i p with U.S. s t a t e l a b o u r f o r c e p a r t i c i p a t i o n r a t e s 37 of (-0.64). In h i s c o n c l u s i o n Gallaway s t a t e s t h a t i n c r e a s e s i n pension b e n e f i t s change the economic behaviour o f the e l d e r l y so as to n e g a t i v e l y s h i f t the q u a n t i t y of labour s u p p l i e d i n the labour market a t v a r i o u s wage r a t e s (p. 187). Bowen and Finegan (1969) i n t h e i r seminal study on labour f o r c e p a r t i c i p a t i o n i n the U.S. i n c l u d e pension incomes of the e l -d e r l y i n an "other income" (01), or non-labour income, v a r i a b l e . Bowen and Finegan acknowledge the i n h e r e n t b i a s which a r i s e s when u s i n g pensions as a determinant of la b o u r f o r c e p a r t i c i p a t i o n s i n c e e l i g i b i l i t y :for many pensions i s c o n d i t i o n a l upon complete, or par-t i a l , withdrawal from the labour f o r c e . T h e i r r e s u l t s suggest t h a t , between 1948 and 1965, the "other income" v a r i a b l e accounts f o r a 9.8 pe r c e n t r e d u c t i o n i n the labour f o r c e p a r t i c i p a t i o n r a t e o f males over 64 years of age. Bowen 1and Finegan"s f i n d i n g s are i n c o n t r a s t t o Clarence Long's (1958), who found no s i g n i f i c a n t r e l a t i o n s h i p between pension income and the d e c l i n e i n U.S. la b o u r f o r c e p a r t i c i p a t i o n r a t e s between 1890 and 1950. T h i s d i s c r e p a n c y can, i n p a r t , be e x p l a i n e d by the f a c t t h a t Long's data s e t i n c l u d e d years--1890 to 1 9 5 0 — i n which pension b e n e f i t s were r e l a t i v e l y s m a l l . As Boskin (1977) p o i n t s out, i t was not u n t i l 1950 t h a t the Old Age and S u r v i v o r s Insurance (OASI) program underwent s u b s t a n t i a l changes and these changes c o i n c i d e w i t h a marked decrease i n the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e . Bowen and Finegan conclude t h a t there i s and p a r t i c u l a r l y the i n c r e a s e i n s o c i a l s e c u r i t y b e n e f i t s and cover-a g e — h a v e pla y e d a major r o l e i n redu c i n g the p a r t i c i p a t i o n of o l d e r " l i t t l e doubt t h a t r i s i n g l e v e l s of oth e r 38 males d u r i n g the postwar ye a r s " (p.357). Michael Boskin (19 77), u s i n g a sample of 131 from the Panel Study of Income Dynamics (an annual n a t i o n a l survey of 5,000 house-holds between 1968 and 1972), a p p l i e s a one-period, i n c o m e - l e i s u r e model to analyse the d i f f e r e n c e between an e l d e r l y i n d i v i d u a l who r e c e i v e s pension b e n e f i t s and one who does not. Boskin's model i n c l u d e s independent v a r i a b l e s f o r h e a l t h , net e a r n i n g s , income from a s s e t s , spouse's e a r n i n g s , and s o c i a l s e c u r i t y b e n e f i t s . He f i n d s s o c i a l s e c u r i t y b e n e f i t s t o be the most important v a r i a b l e with an i n c r e a s e i n b e n e f i t s from $3,000 to $ 4 , 0 0 0 r a i s i n g the p r o b a b i l i t y o f r e t i r e m e n t from 7.5 percent to 16 p e r c e n t . Boskin concludes t h a t : ...recent i n c r e a s e s i n s o c i a l s e c u r i t y b e n e f i t s and coverage, combined w i t h the earnings t e s t are a s i g n i f i c a n t c o n t r i b u t o r of the r a p i d d e c l i n e of the l a b o u r f o r c e p a r t i c i p a t i o n of the e l d e r l y i n the U n i t e d S t a t e s . The s o c i a l s e c u r i t y system i s i n d u c i n g (or enabling) a s u b s t a n t i a l f r a c t i o n o f the e l d e r l y p o p u l a t i o n to r e t i r e e a r l i e r than they would have .in the absence of the system. (p. 19) One o f the c r i t i c i s m s of Boskin's study was p r o v i d e d by A l i c i a Munnell (1977) when she p o i n t e d out t h a t Boskin d i d not d i f f e r -e n t i a t e between p r i v a t e and p u b l i c pensions and hence o v e r s t a t e d the impact of the p u b l i c system. Joseph Quinn (1977a; 1977b) employs data from the Retirement H i s t o r y Survey, a b i - a n n u a l survey of 11,153 men and women between 58 and 63, to analyse the determinants o f e a r l y l a b o u r f o r c e w i t h -drawal. Quinn uses a one-period model based on c r o s s - s e c t i o n data f o r 1969. His f i n d i n g s i n d i c a t e t h a t , i n o r d e r of t h e i r , s i g n i f i c a n c e ^ h e a l t h l i m i t a t i o n s , e l i g i b i l i t y f o r s o c i a l s e c u r i t y , and o t h e r pen-39 s i o n income are the most s i g n i f i c a n t v a r i a b l e s i n i n c r e a s i n g the p r o b a b i l i t y of e a r l y r e t i r e m e n t . A n a l y s i s o f the e f f e c t s of pensions on Canadian labour supply are l i m i t e d t o two s t u d i e s by Pesando and Rea (1977) and Burbidge and Robb (1980). The Pesando and Rea study does not i n c l u d e an econometric a n a l y s i s of l a b o u r supply determinants, but, r a t h e r , o n l y a d i s c u s s i o n of one-period and two-period models of r e t i r e m e n t behaviour. To the knowledge of t h i s author, the Burbidge and Robb study p r o v i d e s the o n l y econometric a n a l y s i s of the f a c t o r s i n f l u -e n c i n g the l a b o u r supply of the e l d e r l y i n Canada. Burbidge and Robb designed a model with the purpose of making "a q u a l i t a t i v e and q u a n t i t a t i v e assessment of the e f f e c t s o f pensions on the r e t i r e m e n t behaviour of o l d e r workers, with p a r t i c u l a r r e f e r -ence to the Canadian Pension P l a n . " Operating w i t h a sample s i z e of 257 from the Pre-Retirement Survey, a supplement to the Labour Force Survey i n 1975 of i n d i v i d u a l s 55 and over but not y e t r e t i r e d , Burbidge and Robb r e g r e s s a dependent v a r i a b l e o f expected r e t i r e -ment age by age groups a g a i n s t independent v a r i a b l e s c o n s i s t i n g of expected pension income, income expected from o t h e r sources, 1974 income, spouses' income, inadequate h e a l t h , compulsory r e t i r e m e n t age, and o c c u p a t i o n . T h e i r r e s u l t s i n d i c a t e t h a t "expected pension b e n e f i t s f i g u r e p rominently i n the r e t i r e m e n t plans of . i n d i v i d u a l s " and t h a t " i n d i v i d u a l s w i t h h i g h , as opposed to low, pension income are 30 t o 60 p e r c e n t more l i k e l y t o r e t i r e e a r l y . " The support f o r pension b e n e f i t s as the most s i g n i f i c a n t d e t e r -minant of e a r l y r e t i r e m e n t i s overwhelming. There are, however, many o t h e r f a c t o r s which i n f l u e n c e the e l d e r l y ' s l a b o u r f o r c e p a r t i e -40 i p a t i o n d e c i s i o n . The onl y other v a r i a b l e which many c o n t r i b u t o r s to the l i t e r a t u r e f e e l i s as important, i f not more so, i n the e l d e r l y ' s ..retirement d e c i s i o n i s h e a l t h r e l a t e d f a c t o r s . (b) Health R e l a t e d F a c t o r s As an i n d i v i d u a l ages he, or she, p h y s i o l o g i c a l l y d e t e r i o r a t e s . S u s c e p t i b i l i t y to h e a l t h problems i s an e s t a b l i s h e d f a c t o f growing' o l d . H e a l t h problems may r e s u l t i n a decrease i n worker product-i v i t y . T h i s lowers the wage r a t e o f f e r e d and decreases the s u b s t i -t u t i o n e f f e c t . In a d d i t i o n , h e a l t h problems can be expected to i n f l u e n c e the i n d i v i d u a l ' s s u b j e c t i v e p r e f e r e n c e f o r l e i s u r e r e s u l t -ing i n a decrease i n the number of i n d i v i d u a l s with h e a l t h problems i n the la b o u r f o r c e . Because of the reasons d i s c u s s e d above i t i s l i k e l y t h a t h e a l t h r e l a t e d f a c t o r s p l a y an important p a r t i n the e l d e r l y ' s d e c i s i o n to withdraw from the labour f o r c e . The U n i t e d S t a t e s S o c i a l S e c u r i t y A d m i n i s t r a t i o n (S.S.A.) has been conducting surveys of r e t i r e e s s i n c e 1941-1942. Past surveys, based p r i m a r i l y on s u b j e c t i v e i n d i v i d u a l s e l f - e v a l u a t i o n , have concluded t h a t poor h e a l t h , and not the OASI program, was the main cause of r e t i r e m e n t . The S.S.A.'s f i n d i n g s may be somewhat b i a s e d because of the i n t e r v i e w technique used i n the survey. Many people may f e e l t h a t r e t i r e m e n t because o f poor h e a l t h i s a more s o c i a l l y a c c e p t a b l e response than a d e s i r e f o r more l e i s u r e , t h e r e f o r e , t h e i r response may o v e r s t a t e the i n f l u e n c e o f poor h e a l t h on the r e t i r e -ment d e c i s i o n . Evidence i n the l i t e r a t u r e which supports t h i s c r i t i c i s m can be found i n Brennan e t a l . (1967), Campbell and Campbell (1976), and Munnell (1977). 41 More r e c e n t surveys conducted by the S.S.A. and s t u d i e s made by economists o u t s i d e the S.S.A. suggest t h a t poor h e a l t h , as w e l l as the e l i g i b i l i t y f o r pension b e n e f i t s , p l a y an i n t e r a c t i v e r o l e i n the cause of r e t i r e m e n t . The 1968-1970 Survey of Newly E n t i t l e d B e n e f i c i a r i e s and the ongoing Retirement H i s t o r y Survey begun i n 1969 f i n d workers are r e t i r i n g because of f a c t o r s o t h e r than h e a l t h . While the 1968: Survey of Newly E n t i t l e d B e n e f i c i a r i e s found h e a l t h t o be the primary reason f o r r e t i r e m e n t , 46 percent responded t h a t they r e t i r e d because they wanted t o . Of t h i s 4 6 p e r c e n t , t w o - t h i r d s responded t h a t e l i g i b i l i t y f o r pension b e n e f i t s i n f l u e n c e d t h e i r d e c i s i o n t o r e t i r e (Reno;(1971)). The more r e c e n t Retirement H i s t o r y Survey f i n d i n g s i n d i c a t e d t h a t 52 p e r c e n t of male r e t i r e e s 64 to 65, and 54 p e r c e n t of male r e t i r e e s 6 6 to 67, who r e t i r e d between 196 9 and 19 73 d i d so because of reasons o t h e r than poor h e a l t h or job displacement (Bixby (1976)). Richard B a r f i e l d and James Morgan (19 74) u t i l i z e d a c r o s s -s e c t i o n a n a l y s i s of a 1966-1967 sample of r e t i r e e s and found h e a l t h and f i n a n c i a l f a c t o r s to i n t e r a c t i v e l y be the most important f a c t o r s i n the r e t i r e m e n t d e c i s i o n . T h e i r c o n c l u s i o n s t a t e d t h a t : Economic f a c t o r s p r o v i d e the b a s i c e n a b l i n g framework f o r the r e t i r e m e n t d e c i s i o n . I f one can a f f o r d to r e t i r e , then h i s d e c i s i o n w i l l be a f f e c t e d by h i s h e a l t h and h i s a t t i t u d e s toward work and r e t i r e m e n t . But i f one f e e l s e c o n o m i c a l l y unable to r e t i r e , o n l y r a t h e r severe; problems with ' (say) h e a l t h o r work may induce r e t i r e m e n t . (p. 70) Joseph Quinn's works (1977a; 1977b) support the interdepend-ent nature of h e a l t h and the r e c e i p t of pension b e n e f i t s on the d e c i s i o n t o r e t i r e . T h i s 1977a study on the microeconomics of 42 e a r l y r e t i r e m e n t conclude t h a t Both h e a l t h and r e t i r e m e n t b e n e f i t e l i g i b i l i t y s t a t u s are important determinants i n the e a r l y r e t i r e m e n t d e c i s i o n and t h a t there i s s u b s t a n t i a l i n t e r a c t i o n between the two. (p. 344) I n c r e a s i n g l y , the c u r r e n t l i t e r a t u r e on the e l d e r l y 1 s w i t h -drawal from the l a b o u r f o r c e i s acknowledging the i n t e r a c t i v e e f f e c t s of the h e a l t h and pension b e n e f i t s ; the one e x c e p t i o n being Boskin (19 77) who f i n d s "no support f o r the c o n j e c t u r e t h a t poor h e a l t h i s the prime mover i n r e t i r e m e n t d e c i s i o n s . " Given t h i s evidence, i t would s t i l l be i n c o r r e c t to assume t h a t poor h e a l t h i s one of the primary f a c t o r s e x p l a i n i n g the r a p i d r e d u c t i o n i n the l a b o u r f o r c e p a r t i c i p a t i o n of the e l d e r l y . While the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e s have d r a m a t i c a l l y decreased s i n c e the t u r n o f the century, the e l d e r l y ' s h e a l t h , as r e f l e c t e d by an i n c r e a s e d average l i f e expectancy, i n p a r t the r e s u l t of improved h e a l t h and m edical s e r v i c e s programs, has improved. C l e a r l y , o t h e r f a c t o r s i n a d d i t i o n to h e a l t h p l a y an important p a r t i n e x p l a i n i n g the e l d e r l y ' s d e c i s i o n to r e t i r e . (c) Economic F a c t o r s There are three economic f a c t o r s which the l i t e r a t u r e r e v e a l s t h a t i n f l u e n c e the e l d e r l y ' s labour supply. These are unemployment, u r b a n i z a t i o n , and labour supply c o m p e t i t i o n . Unemployment, as d i s c u s s e d i n the p r e v i o u s s e c t i o n , i n f l u e n c e s the l a b o u r supply i n two o p p o s i t e ways. The added worker e f f e c t works t o i n c r e a s e the labour supply w hile the d i s c o u r a g e d worker e f f e c t works to decrease the labour supply. One of the f i r s t s t u d i e s 43 using econometric analysis to determine the e f f e c t of unemployment on labour force p a r t i c i p a t i o n was Bowen and Finegan (196 9). Bowen and Finegan"s findings reveal the dominance of the discouraged worker e f f e c t for a l l males and married women. The cohort whose labour supply was most sensitive to a change i n the unemployment rate was that of males 65 and over. Bowen and Finegan found t h i s group responded with a -4.36 percent change i n t h e i r labour force p a r t i c i p a t i o n rate for every 1 percent change i n the unemployment rate. The male 55 to 64 cohort was found to be the second most responsive with a -1.49 percent change i n labour force p a r t i c i p a t i o n for every 1 percent change i n the unemployment rate. Other studies which fi n d a dominant discouraged worker e f f e c t include Glen Cain's (1966) analysis of married women i n the labour force. Cain finds that the labour supplies of both men and women are negatively correlated with the unemployment rate. Marc Rosenblum's (1975) study finds a dominance of the discouraged worker e f f e c t with the most sensi t i v e cohort being workers 55 and over. Quinn's (1977a) finding, too supports the dominance of the discouraged worker e f f e c t . i Canadian studies analyzing the added and discouraged worker ef f e c t s were discussed i n the previous section of t h i s chapter and need not be reviewed again here. The one comment which can be made i s that the Canadian body of l i t e r a t u r e i s less conclusive than the American on which e f f e c t dominates, but that both U.S. and Canadian research tend to agree that the labour supply of the el d e r l y male cohort i s the most sensitive to changes i n the unemployment rates. 44 The degree of u r b a n i z a t i o n i s viewed as a f a c t o r i n f l u e n c i n g the l a b o u r f o r c e p a r t i c i p a t i o n of the e l d e r l y . H i s t o r i c a l l y , the e l d e r l y have been a c t i v e p a r t i c i p a n t s i n the a g r i c u l t u r a l s e c t o r of the economy. The continuous d e c l i n e i n the p r o p o r t i o n o f the labour f o r c e employed i n the a g r i c u l t u r a l s e c t o r has r e s t r i c t e d the employment o p p o r t u n i t i e s of the e l d e r l y . Munnell (1974), b e l i e v e s t h a t the r u r a l t o urban m i g r a t i o n o f the e l d e r l y has been a f a c t o r i n the e l d e r l y 1 s long-term labou r f o r c e p a r t i c i p a t i o n d e c l i n e . Gallaway's (1971) e m p i r i c a l a n a l y s i s p r o v i d e s evidence t h a t the e l d e r l y 1 s l a b o u r f o r c e p a r t i c i p a t i o n r a t e i s n e g a t i v e l y c o r r e l a t e d with U.S. s t a t e u r b a n i z a t i o n l e v e l s . Bowen and Finegan (1969) c i t e a change i n r e s i d e n t i a l c h a r a c t e r i s t i c s as the most important demographic v a r i a b l e i n the aggregate labou r supply of males 64 and over. T h e i r study estimates t h a t between 194 8 and 19 65 the labour f o r c e p a r t i c i p a t i o n r a t e of males 64 and over d e c l i n e d by 2.7 perc e n t as a consequence of a change i n r e s i d e n t i a l c h a r a c t e r i s t i c s . Competition f o r jobs by younger, more h i g h l y s k i l l e d p a r t i c i -pants i n the labour market has been proposed as a f a c t o r i n the r e d u c t i o n o f the e l d e r l y ' s l a b o u r supply. Long (1958) maintains t h a t the growth i n the labour supply of women has decreased the e l d e r l y ' s l a b o u r supply. Long f e e l s t h a t the younger, b e t t e r t r a i n e d women e n t e r i n g the job market are i n g r e a t e r demand than o l d e r workers whose stock i n human c a p i t a l i s often'viewed as ou t - o f - d a t e . Long a l s o f e e l s t h a t i n c r e a s e d p a r t i c i p a t i o n by female members of the f a m i l y i n c r e a s e s the f a m i l y ' s u t i l i t y f u n c t i o n a l l o w i n g o l d e r members of the household to consume more l e i s u r e by r e t i r i n g . J u a n i t a Kreps (1967) extends Long's b e l i e f s i n her model of l i f e t i m e 45 a l l o c a t i o n of work and l e i s u r e . Kreps b e l i e v e s the l a r g e i n f l u x of baby-boomers i n t o the job market d u r i n g the 1950s and 1960s s i g n i -f i c a n t l y reduced the w o r k - l i f e of e l d e r l y workers. Brennan e t a l . (1967, pp. 43-58) i n t h e i r c r o s s - s e c t i o n a n a l y s i s of f o u r t e e n manu-f a c t u r i n g i n d u s t r i e s i n 1959 d e r i v e d l a b o u r demand and supply equations which suggested t h a t employment of women a d v e r s e l y a f f e c t e d the employment o f o l d e r males. ...employment of females does a f f e c t a d v e r s e l y the.employment of m a l e s — w i t h the o l d e s t , the youngest, and the i n t e r m e d i a t e ages a f f e c t e d i n t h a t o r d e r . Female labor.; has been. s u b s t i t u t e d f o r male l a b o r by i n d u s t r i a l f i r m s , but not u n i f o r m l y a c r o s s a l l age groups. (p. 56) (d) Other F i n a n c i a l F a c t o r s There are f o u r f i n a n c i a l f a c t o r s which the l i t e r a t u r e i d e n t i f i e s t h a t may i n f l u e n c e the l a b o u r supply of the e l d e r l y . These i n c l u d e the i n d i v i d u a l wage r a t e , spouse's e a r n i n g s , a s s e t income, and o c c u p a t i o n . Each of these w i l l i n t u r n be d i s c u s s e d . The d i s c u s s i o n of the w o r k - l e i s u r e model i n the p r e v i o u s sec-t i o n o f t h i s chapter d e s c r i b e d the e f f e c t a r i s e i n the wage r a t e would have on i n d i v i d u a l l a b o u r supply. The s u b s t i t u t i o n e f f e c t would work to i n c r e a s e the amount of labour s u p p l i e d while the income e f f e c t would work to reduce the amount of l a b o u r s u p p l i e d . Due t o the a v a i l a b i l i t y of non-labour income i n the form of pensions and the h y p o t h e s i z e d p r e f e r e n c e o f the e l d e r l y f o r l e i s u r e over work, the l i t e r a t u r e expects e l d e r l y workers to be more s e n s i t i v e t o changes i n the wage r a t e than prime-age workers. Bowen and Finegan (1969), e x p e c t i n g to f i n d a p o s i t i v e r e l a t i o n -s h i p between the la b o u r f o r c e p a r t i c i p a t i o n of males 65 and over 4 6 and e a r n i n g s , found no s i g n i f i c a n t r e l a t i o n s h i p . In t h e i r d i s c u s s -i o n o f the decrease i n the e l d e r l y 1 s l a b o u r f o r c e p a r t i c i p a t i o n r a t e they conclude t h a t " i t i s b e s t to assume t h a t e a r n i n g s per se has had a n e g l i g i b l e impact." Quinn's (1977a) a n a l y s i s o f the e l d e r l y 1 s r e t i r e m e n t determinants i n c l u d e d a c o r r e l a t i o n of l a b o u r f o r c e p a r t i c i p a t i o n and the wage o f an o l d e r worker. His r e s u l t s i n d i c a t e d no s i g n i f i c a n t r e l a t i o n s h i p e x i s t e d and supported Bowen and Finegan's c o n c l u s i o n . The l i t e r a t u r e r e v e a l s t h a t a dependent v a r i a b l e based on hours of work s u p p l i e d , as opposed to labour f o r c e p a r t i c i p a t i o n r a t e s , i s more s e n s i t i v e t o changes i n wage r a t e s o r e a r n i n g s . Although reg r e s s i o n s , u s i n g hours o f work s u p p l i e d as a dependent v a r i a b l e and the wage r a t e or earnings as an independent v a r i a b l e have g i v e n more s i g n i f i c a n t r e s u l t s , t h e i r f i n d i n g s are f a r from c o n c l u s i v e . Quinn (1977a) found evidence of a smal l income e f f e c t . Boskin's (1973) work i n d i c a t e d a s m a l l s u b s t i t u t i o n e f f e c t , and Parnes e t a l . (1975) found a s i g n i f i c a n t but i r r e g u l a r r e l a t i o n s h i p . C l e a r l y , the l i t e r a t u r e on - the i n f l u e n c e o f wage r a t e s and earn i n g s remains c o n f l i c t i n g and undecided on which e f f e c t — i n c o m e o r s u b s t i t u t i o n — dominates the labour supply o f the e l d e r l y . A spouse's earnings are hypothesized to i n f l u e n c e the amount of l a b o u r o f f e r e d by her husband. Family l i f e - c y c l e theory views la b o u r supply d e c i s i o n s as d e c i s i o n s j o i n t l y determined by a l l f a m i l y members. A spouse e n t e r i n g the work f o r c e i n c r e a s e s f a m i l y income and enables the i n c r e a s e d consumption of l e i s u r e o r non-market work by oth e r , p o s s i b l y e l d e r l y , members of the f a m i l y . The l i t e r a t u r e r e v e a l s l i t t l e o r no i n f l u e n c e o f spouse's earnings on 47 male l a b o u r supply. Boskin (1977) uncovers o n l y a sma l l negative i n f l u e n c e o f spouse's ea r n i n g s on the p r o b a b i l i t y o f the husband r e t i r i n g , w h i l e Quinn's (1977a) f i n d i n g s show more s e n s i t i v i t y of e l d e r l y female l a b o u r supply t o spouse's e a r n i n g s . The income e f f e c t o f non-labour income or a s s e t income on labour supply was d i s c u s s e d i n the p r e v i o u s s e c t i o n o f t h i s chapter. With r e s p e c t to the e l d e r l y , the income e f f e c t o f a s s e t income i s expected to be s i g n i f i c a n t , but of l e s s i n f l u e n c e as a labour supply determinant than s o c i a l s e c u r i t y o r p r i v a t e pension b e n e f i t s (Clark and Spengler (1980)). Quinn (1977a) f i n d s a s i g n i f i c a n t n e g a t i v e i n f l u e n c e o f i n c r e a s e d a s s e t income on p a r t i c i p a t i o n r a t e s of married white males. His f i n d i n g s suggest a r i s e i n a s s e t income from $1,000 to $3,000 would decrease p a r t i c i p a t i o n r a t e s by 6.5 pe r c e n t . Boskin (1977) sees a $1,000 annual i n c r e a s e i n a s s e t income i n c r e a s i n g the p r o b a b i l i t y of r e t i r e m e n t by 15 p e r c e n t . T h i s i s i n c o n t r a s t t o h i s 1973 study which r e v e a l e d no s i g n i f i c a n t i n f l u e n c e o f a s s e t income on e l d e r l y white husbands. F i n a l l y , Bowen and Finegan (1969) f i n d a s i g n i f i c a n t r e l a t i o n s h i p ; however, a s s e t income was grouped i n t o an "other income" v a r i a b l e which i n c l u d e d s o c i a l s e c u r i t y b e n e f i t s and, because of t h i s , Bowen and Finegan probably o v e r s t a t e the i n f l u e n c e of a s s e t income on e l d e r l y l a b o u r supply. The o c c u p a t i o n a worker chooses i s another f a c t o r which can i n f l u e n c e h i s r e t i r e m e n t d e c i s i o n . I t i s b e l i e v e d t h a t w h i t e - c o l l a r workers and self-employed workers r e c e i v e g r e a t e r job s a t i s f a c t i o n and p s y c h i c income from t h e i r occupations than b l u e - c o l l a r workers do. In a d d i t i o n , w h i t e - c o l l a r jobs are, i n g e n e r a l , l e s s p h y s i c a l l y t a x i n g on e l d e r l y workers than b l u e - c o l l a r j o b s . These f a c t o r s 48 support the b e l i e f t h a t e l d e r l y workers i n w h i t e - c o l l a r or s e l f -employment occupations s t a y i n the l a b o u r f o r c e longer than e l d e r l y workers employed i n b l u e - c o l l a r o c c u p a t i o n s . A number of s t u d i e s i n c l u d i n g Henry Sheldon (1958), Pechman e t a l . (1968), Bowen and Finegan (1969), Munnell (1974), and Parnes e t a l . (1975) argue t h a t the d e c l i n e i n the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e has been i n f l u e n c e d by the decrease i n the number of self-employed e l d e r l y i n d i v i d u a l s . Karen Schwab (1974), r e p o r t i n g on f i n d i n g s of The Retirement H i s t o r y Survey, v e r i f i e s the importance of o c c u p a t i o n as a f a c t o r i n the l a b o u r f o r c e p a r t i c i p a t i o n of the e l d e r l y . Schwab f i n d s t h a t a s m a l l e r p r o p o r t i o n of p r o f e s s i o n a l s , farmers.and managers are r e t i r e d than o p e r a t i v e s , s e r v i c e workers, and l a b o u r e r s . (e) Family and I n d i v i d u a l F a c t o r s Family and i n d i v i d u a l f a c t o r s i d e n t i f i e d i n the l i t e r a t u r e which are h y pothesized to i n f l u e n c e the e l d e r l y ' s labour supply i n c l u d e e d u c a t i o n , m a r i t a l s t a t u s and r a c e . Bowen and Finegan (1969), Sherman (1974), and Boskin (1977) a l l p r o v i d e evidence t h a t e d u c a t i o n and the average age of r e t i r e -ment are p o s i t i v e l y c o r r e l a t e d . The problems with i n c l u d i n g an e d u c a t i o n v a r i a b l e and an expected wage v a r i a b l e i n a model which a l r e a d y i n c l u d e s an o c c u p a t i o n v a r i a b l e i s t h a t o c c u p a t i o n may be c o r r e l a t e d with e d u c a t i o n and expected wage. Occupation i s a f u n c t i o n of the l e v e l of s c h o o l i n g a t t a i n e d , and a l s o r e f l e c t s on the expected wage. I n c l u d i n g a l l three v a r i a b l e s i n a model can l e a d to severe m u l t i c o l i n e a r i t y between the three v a r i a b l e s and p r o v i d e i n v a l i d 49 output i n an e x p l a n a t o r y model. The most prudent course of a c t i o n seems to be to i n c l u d e o n l y an o c c u p a t i o n v a r i a b l e . C o n t r i b u t i o n s t o the l i t e r a t u r e commenting on the i n f l u e n c e of m a r i t a l s t a t u s and race ( s p e c i f i c a l l y b l a c k males and females) can be found i n Bowen and Finegan (1969), Parnes e t a l . (1975), and Quinn (1977a). In a l l cases, married men were found to p a r t i c i p a t e more and l o n g e r i n the l a b o u r f o r c e than s i n g l e men. The r e v e r s e a p p l i e d to women. The s t u d i e s reviewed suggested t h a t race was p o s i t i v e l y r e l a t e d w i t h e a r l y r e t i r e m e n t f o r non-white males; how-ever, the magnitudes of the r e l a t i o n s h i p v a r i e d . In summary then, the review of a v a i l a b l e l i t e r a t u r e i n d i c a t e s t h a t e l i g i b i l i t y f o r , or expected, pension income and poor h e a l t h are the two most s i g n i f i c a n t f a c t o r s i n f l u e n c i n g the e l d e r l y ' s r e t i r e m e n t d e c i s i o n . No consensus has y e t been reached as to which f a c t o r i s more s i g n i f i c a n t , however, r e c e n t c o n t r i b u t i o n s argue the i n t e r a c t i v e i n f l u e n c e of both pension income and poor h e a l t h . Other f a c t o r s found to be important i n the e l d e r l y ' s r e t i r e m e n t d e c i s i o n i n c l u d e : economic f a c t o r s such as unemployment, u r b a n i z a t i o n , and labour supply c o m p e t i t i o n ; o t h e r f i n a n c i a l f a c t o r s such as wage r a t e , spouse's e a r n i n g s , a s s e t income, and occupation; f a m i l y and i n d i v i d u a l f a c t o r s such as e d u c a t i o n , m a r i t a l s t a t u s , and r a c e . Based on the review above of the f a c t o r s i n f l u e n c i n g the e l d e r -l y 's r e t i r e m e n t d e c i s i o n , the f o l l o w i n g s e c t i o n w i l l propose a mod-e l which attempts to e x p l a i n the l a b o u r supply determinants o f Canada's e l d e r l y . Due to the d e a r t h o f Canadian data sources many of the independent v a r i a b l e s i n c l u d e d i n the U.S. s t u d i e s cannot be i n c l u d e d here. 50 B. A Model of the E l d e r l y ' s Labour Supply T h i s s e c t i o n o f the chapter proposes a model o f the determin-ants o f the e l d e r l y ' s l a b o u r s u p p l y . The model i s presented, and i n t u r n , the dependent and independent v a r i a b l e s i n c l u d e d i n the equation are d i s c u s s e d i n d e t a i l . (i) The Model The f o l l o w i n g model i s designed to e x p l a i n the r e l a t i v e import-ance of the v a r i a b l e s which are h y p o t h e s i z e d to i n f l u e n c e the labour f o r c e p a r t i c i p a t i o n r a t e s o f the e l d e r l y i n Canada: L F P j k = a + b l R B E j k + b 2 O C C j k + b 3 U N E j k + b 4 U R B j k + b 5 F P R j k + e j k (j=l,...,10) (k=l,...,3) Where the dependent v a r i a b l e , L F P j k , i s the labour f o r c e p a r t i c i -p a t i o n r a t e of males and females 65 years o f age and over i n p r o v i n c e j i n census year k. The independent v a r i a b l e s i n c l u d e RBE, the r a t i o of average r e t i r e m e n t b e n e f i t s to t o t a l average e a r n i n g s ; OCC, the r a t i o o f the e l d e r l y work f o r c e employed i n w h i t e - c o l l a r , as opposed t o b l u e - c o l l a r , o c c u p a t i o n s ; URB, the r a t i o o f the p o p u l a t i o n l i v i n g i n urban areas; and FPR, the o v e r - a l l female l a b o u r f o r c e p a r t i c i p a t i o n r a t e . e_-k r e p r e s e n t s a random s t a t i s t i c a l e r r o r term added t o , or s u b t r a c t e d from, the e q u a t i o n . The assumptions the model i s based on i n c l u d e : (1) The expected value of the e r r o r term e., i s zero; e i s normally d i s t r i b u t e d ; and the standard-'aeviation of -'e i s the same r e g a r d l e s s the value o f the independent v a r i a b l e s . A l s o , the value o f e - k i s assumed to be s t a t -i s t i c a l l y independent. -* 51 (2) The dependent v a r i a b l e LFP ., i s assumed to be l i n e a r l y r e -l a t e d t o the independent v a r i a b l e s i n the e q u a t i o n . A l s o , i t i s assumed no l i n e a r r e l a t i o n s h i p e x i s t s between the independent v a r i a b l e s and t h e i r i n f l u e n c e on the dependent v a r i a b l e i s a d d i t i v e . ( i i ) The Dependent V a r i a b l e The dependent v a r i b l e LFP..^ was chosen as the proxy f o r l a b o u r supply of the e l d e r l y f o r two main reasons: (1) At the l e v e l of aggregation chosen no o t h e r v a r i a b l e p r o v i d e d as r e l i a b l e and e a s i l y o b t a i n a b l e a proxy f o r the e l d e r l y 1 s l a b o u r supply. (2) A l a r g e number of p r e v i o u s s t u d i e s use the labour f o r c e p a r t i c i p a t i o n r a t e as a measure of the e l d e r l y ' s l a b o u r supply or r e t i r e m e n t d e c i s i o n ; thereby a l l o w i n g a comparison o f r e s u l t s . Data f o r the dependent v a r i a b l e was d e r i v e d by t a k i n g the l a b o u r f o r c e p a r t i c i p a t i o n r a t e s of the e l d e r l y , i n c l u d i n g men and women, f o r each p r o v i n c e i n Canada f o r the years 1961, 1971, and 1976. ( i i i ) The Independent V a r i a b l e s RFJE, the r a t i o o f average r e t i r e m e n t b e n e f i t s to t o t a l average earnings f o r each p r o v i n c e , i s s i m i l a r to the pension v a r i a b l e designed by Gordon (1963a; 1963b) , Pechman e t aT>. (1968) , and Gallaway (1971). RBE i s d e r i v e d by d i v i d i n g average p u b l i c pension b e n e f i t s (O.A.S. and G.I.S., but not C P . P . which was s t i l l b eing phased i n over the data s e t period) p a i d per person by p r o v i n c e w i t h average y e a r l y income, based on a l l r e t u r n s f o r year k, f o r people 65 and over by p r o v i n c e . I t i s hypothesized, g i v e n t h a t i n l a b o u r supply theory pension b e n e f i t s generate an income e f f e c t , t h a t LFP w i l l vary i n v e r s e l y with RBE s i n c e the g r e a t e r the amount of r e t i r e -52 merit b e n e f i t s one r e c e i v e s the l e s s the i n c e n t i v e to p a r t i c i p a t e i n the labour f o r c e . Evidence i n the l i t e r a t u r e which supports t h i s view can be found i n Gordon (1963a; 1963b), Pechman e t a l . (1968), Bowen and Finegan (1969), Gallaway (1971), Boskin (1977), Quinn (1977a; 1977b), and Burbidge and Robb (1980). OCC, the r a t i o o f the e l d e r l y work f o r c e employed i n white-c o l l a r o c c u p a t i o n s , i s d e r i v e d by d i v i d i n g the number of persons 65 and over employed i n w h i t e - c o l l a r occupations f o r p r o v i n c e j by those 65 and over employed i n b l u e - c o l l a r o c c u p a t i o n s f o r p r o v i n c e j i n 1961, 1971, and 1976. T h i s study d e f i n e s w h i t e - c o l l a r occu-p a t i o n s as: 1. Management, A d m i n i s t r a t i o n and r e l a t e d 2. N a t u r a l Science, E n g i n e e r i n g and Math 3. S o c i a l Science,.and r e l a t e d 4. R e l i g i o n 5. Teaching and r e l a t e d 6. Medicine arid H e a l t h 7. A r t , L i t e r a t u r e , R e c r e a t i o n and r e l a t e d 8. C l e r i c a l and r e l a t e d 9. Sales 10. S e r v i c e B l u e - c o l l a r o c c u p a t i o n s are d e f i n e d as: 1. Farming, H o r t i c u l t u r e and Husbandry 2. F i s h i n g , Hunting, Trapping and r e l a t e d 3. F o r e s t r y and Logging 4. Mining and Quarrying 5. P r o c e s s i n g 6. Machining and r e l a t e d 7. Product F a b r i c a t i n g and Assembling 8. C o n s t r u c t i o n 9. T r a n s p o r t and Equipment Operating 10. M a t e r i a l s Handling 11. C r a f t s and Equipment Operating I t i s hyp o t h e s i z e d t h a t e l d e r l y persons employed i n white-c o l l a r jobs r e c e i v e g r e a t e r job s a t i s f a c t i o n and p e r s o n a l rewards than t h e i r c o u n t e r p a r t s i n the more p h y s i c a l l y demanding b l u e -c o l l a r o c c u p a t i o n s . With g r e a t e r job s a t i s f a c t i o n , p h y s i c a l l y l e s s t a x i n g d u t i e s , and more work schedule f l e x i b i l i t y e l d e r l y workers i n w h i t e - c o l l a r occupations w i l l have h i g h e r l a b o u r f o r c e p a r t i c i -p a t i o n r a t e s than b l u e - c o l l a r c o u n t e r p a r t s . Evidence i n the l i t e r -a ture to support t h i s can be found i n Sheldon (1958), Pechman e t a l . (1968), Bowen and Finegan (1969), Munnell (1974), Schwab (1974), and Parnes a t a l . (1975). The v a r i a b l e UNE i s the o v e r - a l l s e a s o n a l l y a d j u s t e d unemploy-ment r a t e by p r o v i n c e f o r 1961, 1971, and 1976. Labour supply theory sees unemployment a f f e c t i n g the LFP of the e l d e r l y i n two ways. F i r s t , i f the added worker e f f e c t predominates the LFP of the e l d e r l y w i l l be p o s i t i v e l y a s s o c i a t e d with UNE. In o t h e r words, as the independent v a r i a b l e UNE i n c r e a s e s the e l d e r l y worker w i l l be f o r c e d to remain i n or r e e n t e r the work f o r c e or face the p r o s p e c t of moving to a lower i n d i v i d u a l or household i n d i f f e r e n c e curve. This w i l l cause the dependent v a r i a b l e LFP to i n c r e a s e as w e l l . Second, i f the discouraged worker e f f e c t predominates LFP i s expected to be n e g a t i v e l y a s s o c i a t e d with UNE. As the independent UNE v a r i a b l e i n c r e a s e s the dependent LFP w i l l decrease due to the e l d e r l y 1 s - ; l o w e x p e c t a t i o n of f i n d i n g a job when UNE i s h i g h . American s t u d i e s (Cain (1966), Bowen and Finegan (1969), Quinn (1977a; 1977b) and Rosenblum (19 75)) support the predominance of the d i s c o u r a g e d worker e f f e c t . Canadian s t u d i e s are l e s s c o n c l u s i v e with s t u d i e s by Ostry (1968), P r o u l x (1969), Spencer and Featherstone (1970), Davis (1971), Donner and Lazar (1974), and Swan (1974) s u p p o r t i n g the predominance of the added worker e f f e c t , and s t u d i e s by O f f i c e r and Anderson 54 (1969), Spencer (1973), Swidinsky (1973), and Gunderson (1977) supporting the predominance of the discouraged worker e f f e c t . UBB, the r a t i o of the population l i v i n g i n urban areas, i s derived by d i v i d i n g the t o t a l p r o v i n c i a l population by the t o t a l l i v i n g i n urban areas as defined by S t a t i s t i c s Canada. I t i s hy-pothesized that LFP w i l l vary inversely with URB since employment in r u r a l l y based sectors of the economy, p a r t i c u l a r l y farming, ho r t i c u l t u r e and husbandry, involves greater p a r t i c i p a t i o n by the e l d e r l y . With greater urbanization the r u r a l e l d e r l y , with t h e i r higher LFP rates, become a smaller proportion of the t o t a l labour force. Evidence i n the l i t e r a t u r e which supports this r e l a t i o n s h i p can be found i n Bowen and Finegan (1969), Gallaway (1971), and Munnell (1974). The variable FPR, the o v e r - a l l female labour force p a r t i c i p a t i o n rate by province, i s used as a proxy to measure the influence of labour supply competition. FPR i s expected to be negatively associ-ated with LFP. F i r s t , as younger, better trained, women enter the competitive job market older participants w i l l become obsolete and eventually driven out of the labour force. Second, as the daughters and wives of older working men f i n d jobs the f i n a n c i a l necessity of remaining i n the labour force w i l l be reduced and older males w i l l be more l i k e l y to r e t i r e . Evidence i n the l i t e r a t u r e to support t h i s hypothesis can be found i n Long (1958), Kreps (1967), and Brennan et a l . (1967). In summary, thi s section of chapter 3 presented a cross-sectional model of the labour supply determinants of the e l d e r l y i n Canada. The dependent variable u t i l i z e d the e l d e r l y 1 s labour force p a r t i c i -pation rate as a proxy for labour supply. Included i n the model as independent variables were proxy measures for the influence of pension related factors, economic factors, and other f i n a n c i a l factors, with variables s p e c i f i c to economic factors being most numerous. The model i s designed to be multiply regressed and an explanatory equation derived. The res u l t s of the regression anal-ysis are presented and discussed i n the following chapter. 56 Chapter 4 THE EMPIRICAL FINDINGS T h i s chapter d e s c r i b e s the sources used to c o l l e c t data f o r the v a r i a b l e s employed i n the model. In a d d i t i o n , the chapter d i s -cusses the r e s u l t s o b t a i n e d from the m u l t i p l e r e g r e s s i o n a n a l y s i s , and the p r i n c i p a l data and model d e f i c i e n c i e s . A. The Data Base The bulk of the data f o r the v a r i a b l e s used i n the model was d e r i v e d from S t a t i s t i c s Canada census sources. A number of other data sources were used to c o l l e c t data f o r the a s s o r t e d v a r i a b l e s ; t h e r e f o r e , the data sources f o r each v a r i a b l e w i l l be d i s c u s s e d i n t u r n . Data f o r the dependent v a r i a b l e LFP, the labour f o r c e p a r t i c -i p a t i o n r a t e f o r persons 65 and over i n the p r o v i n c e f o r 1961, 1971, and 1976 was o b t a i n e d e n t i r e l y from S t a t i s t i c s Canada census p u b l i c a t i o n s . The independent v a r i a b l e RBE, the r a t i o of r e t i r e m e n t b e n e f i t s to t o t a l income, was c o n s t r u c t e d w i t h data from two sources. F i r s t , data on average annual p u b l i c pension b e n e f i t s was o b t a i n e d from S t a t i s t i c s Canada's annual p u b l i c a t i o n o f H e a l t h and Welfare data on S o c i a l S e c u r i t y Programs i n Canada. In 1971 and 1976 RBE i n c l u d e s b e n e f i t s from the O.A.S. and G.I.S. program s i n c e the G.I.S. program was n o n e x i s t e n t i n 1961. B e n e f i t s p a i d through the CP.P./ Q.P.P. program are not i n c l u d e d i n any year s i n c e the C.P.P./Q.P.P. program i s a v a i l a b l e o n l y to those who p a i d i n t o i t , and the program 57 was phased i n b e g i n n i n g 19 66. Second, data on average annual t o t a l income was o b t a i n e d from Revenue Canada sources based on t a x -a t i o n r e t u r n s f o r a l l i n d i v i d u a l s 65 and over by p r o v i n c e . RBE i s simply the r a t i o o f p u b l i c pension income, as d e r i v e d from average p r o v i n c i a l O.A.S. and G.I.S. b e n e f i t s , t o t o t a l income, as d e r i v e d from t a x a t i o n r e t u r n s f o r a l l i n d i v i d u a l s 6 5 and over by p r o v i n c e , f o r each of the three years, 1961, 1971, and 1976. Data f o r OCC, the r a t i o of w h i t e - c o l l a r e l d e r l y to b l u e - c o l l a r e l d e r l y , was o b t a i n e d e n t i r e l y from S t a t i s t i c s Canada census pub-l i c a t i o n s f o r 1961 and 1971. S t a t i s t i c s Canada o n l y asks questions about o c c u p a t i o n i n t h e i r d e c e n n i a l censuses so data on o c c u p a t i o n was not a v a i l a b l e f o r 1976 and c o u l d not be i n c l u d e d i n the m u l t i p l e r e g r e s s i o n a n a l y s i s . Data f o r the independent v a r i a b l e UNE, the p r o v i n c i a l unemploy-ment r a t e was obtained from S t a t i s t i c s Canada census p u b l i c a t i o n s f o r 1971 and 1976, and from data p u b l i s h e d by the Conference Board o f Canada f o r 1961. Data f o r the URB v a r i a b l e , the percentage of the p r o v i n c i a l p o p u l a t i o n l i v i n g i n urban areas, and the FPR v a r i a b l e , the p r o v i n c i a l female labour f o r c e p a r t i c i p a t i o n r a t e , was o b t a i n e d e n t i r e l y from S t a t i s t i c s Canada census sources f o r 1961, 1971, and 1976. B. D i s c u s s i o n of R e s u l t s Four m u l t i p l e r e g r e s s i o n s were run. The f i r s t three employed the dependent v a r i a b l e s LFPg^, LFP.^, and LFP^g. L F P 5 i 1 S d e f i n e d as the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e f o r 1961, and LFP^^ and L F P 7 g being s i m i l a r dependent measures f o r 1971 and 1976 r e s p e c t -58 i v e l y . The f o u r t h r e g r e s s i o n employed L F P g i _ 7 2 . a s •"•ts dependent v a r i a b l e . T h i s r e g r e s s i o n u t i l i z e d the change i n the dependent and independent v a r i a b l e s between 1961 and 1971, r e g r e s s e d these d i f f e r -ences, and d e r i v e d an e x p l a n a t o r y equation which measured those v a r i a b l e s which were most s i g n i f i c a n t i n the change of the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n between 19 61 and 1971. The f i r s t three r e g r e s s i o n s are c r o s s - s e c t i o n a l a n a l y s e s , meaning they are analyses based on data f o r p a r t i c u l a r p o i n t s i n time (1961, 1971, and 1976) . The f o u r t h r e g r e s s i o n i s a t i m e - s e r i e s a n a l y s i s , meaning i t i s an a n a l y s i s based on data over a number o f p o i n t s i n time (1961 and 19 71) . T i m e - s e r i e s analyses are normally based on more than j u s t two p o i n t s i n time; however, data which would a l l o w more years to be i n c l u d e d and the f a c t t h a t data f o r the OCC v a r i a b l e i n 1976 was not a v a i l a b l e meant a t i m e - s e r i e s a n a l y s i s c o u l d o n l y be conducted which i n c l u d e d 1961 and 1971. M u l t i p l e r e g r e s s i o n a n a l y s i s allows the r e s e a r c h e r to s e t l e v e l s of confidence or s i g n i f i c a n c e a t which to t e s t both the o v e r - a l l p r e d i c t i v e equation and the i n d i v i d u a l c o e f f i c i e n t s i n s i d e the e q u a t i o n . To t e s t the o v e r - a l l p r e d i c t i v e equation a n u l l h y p o t h e s i s i s s t a t e d t h a t the value of a l l of the c o e f f i c i e n t s i n the p r e d i c t -i v e equation equal zero. I f measures o f t or F exceed the confidence l e v e l assigned, the n u l l h y p o t h e s i s i s r e j e c t e d . Confidence l e v e l s , o r l e v e l s of s i g n i f i c a n c e , are g e n e r a l l y s e t a t .01 or .05; however, o c c a s i o n a l l y the l e v e l i s s e t a t the l e s s r i g o r o u s .10 l e v e l . A confidence l e v e l s e t at .01 means there i s a 1 percent chance o f r e j e c t i n g a n u l l h y p o thesis which, i n e f f e c t , i s v a l i d . A l e v e l s e t at .05 means there i s a 5 p e r c e n t chance of r e j e c t i n g a v a l i d n u l l 59 h y p o t h e s i s . To t e s t the i n d i v i d u a l c o e f f i c i e n t s i n a r e g r e s s i o n equation a n u l l h y p o t h e s i s i s s t a t e d f o r each i n d i v i d u a l r e g r e s s i o n c o e f f i c i e n t which s e t s the v a l u e of the r e g r e s s i o n c o e f f i c i e n t equal to zero. I f measures of t or F exceed the confidence l e v e l a s s i g n e d the n u l l h y p o t h e s i s i s again r e j e c t e d . The v a l u e o b t a i n e d f o r the r e -g r e s s i o n c o e f f i c i e n t i s important because i t measures the e f f e c t of a one u n i t i n c r e a s e i n the independent v a r i a b l e on the expected v a l u e of the dependent v a r i a b l e , when a l l o t h e r independent v a r i a b l e s i n the equation are h e l d c o n s t a n t . Table V I I I summarizes the r e g r e s s i o n r e s u l t s of the f o u r re-., g r e s s i o n s run. The two p r e d i c t i v e equations f o r 1961 and 1971 are s i g n i f i c a n t a t the p = .05 l e v e l of s i g n i f i c a n c e , and the p r e d i c t i v e e q uation f o r 1976 i s s i g n i f i c a n t a t the p = .01 l e v e l of s i g n i f - . i c a n c e . The r e g r e s s i o n equation e x p l a i n i n g the change i n the e l d e r -l y ' s l a b o u r f o r c e p a r t i c i p a t i o n between 1961 and 1971 i s s i g n i f i c a n t 2 a t the lower p = .10 l e v e l of s i g n i f i c a n c e . The a d j u s t e d R v a l u e s f o r the f i r s t three r e g r e s s i o n s are moderately high ranging from .80 to .90. The r e l a t i o n s h i p between the dependent v a r i a b l e and i n -dependent v a r i a b l e s , f o r each of the three years of a n a l y s i s , w i l l be d i s c u s s e d i n t u r n . The stepwise i n c l u s i o n r e g r e s s i o n f o r 1961 r e v e a l s the import-ance of the UNE, OCC, and RBE v a r i a b l e s as determinants of the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e . The OCC v a r i a b l e , however, i s the o n l y v a r i a b l e i n the equation which i s s t a t i s t i c a l l y s i g n i f -i c a n t a t the p = .05 l e v e l of s i g n i f i c a n c e . The OCC v a r i a b l e , the Table V I I I R e s u l t s of Regression A n a l y s i s DEPENDENT VARIABLE CONSTANT UNE URB FPR RBE OCC R 2 ADJ R 2 F RATIO LFP 61 ** 54.8 -.532 I n s u f f . .126 -1.03 -.284 (3.05) T o i . (.191) (3.68) (15.6) .94 89 19.63 *** LFP 71 61.4 .109 -.177 .210 -.720 -.235 (.093) (3.48) (2.43) (4.28) (5.59) 91 80 8.36 ** LFP 76 ** *** * * 23.6 -.721 -.126 .178 -.116 (10.3) (19.6) (2.30) (2.65) N/A .94 90 20.85 * * * LFP 61-71 .715 ** -.173 (7.28) .120 I n s u f f . -.174 -.076 (.755) T o i . (3.11) (1.42) .78 61 4.59 *** p = .01 ** p = .05 * P = .10 F R a t i o s of C o e f f i c i e n t s are i n Brackets o 61 p r o p o r t i o n o f the e l d e r l y labour f o r c e employed i n w h i t e - c o l l a r occupations shows an unexpected negative r e l a t i o n s h i p w i t h LFP^^. T h i s f i n d i n g c o n t r a s t s with the hypothesized p o s i t i v e / r e l a t i o n s h i p expected (Sheldon (1958); Pechman e t a l . (1968); Bowen and Finegan (1969); Munnell (1974); Schwab (1974); and Parnes e t a l . (1975)). T h i s r e s u l t c o u l d mean t h a t the hyp o t h e s i z e d p o s i t i v e r e l a t i o n s h i p between LFP and OCC may not be v a l i d . A l t e r n a t i v e l y , the r e s u l t may, i n p a r t , be e x p l a i n e d by the importance of the primary s e c t o r i n d u s t r i e s as a source of employment f o r the e l d e r l y . While the p v e r - a l l number of e l d e r l y i n the labour f o r c e i s d e c r e a s i n g , the p r o p o r t i o n o f e l d e r l y employed i n w h i t e - c o l l a r occupations i s i n c r e a s i n g . T h i s p a t t e r n suggests t h a t a l a r g e r withdrawal o f e l d e r l y workers employed i n the primary s e c t o r , o r b l u e - c o l l a r occu-p a t i o n s accounts f o r the o v e r - a l l d e c l i n e i n the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e . With LFPg^ as the dependent v a r i a b l e UNE, the p r o v i n c i a l unem-ployment r a t e , i n d i c a t e s the predominance of the discouraged worker e f f e c t . T h i s supports the f i n d i n g s o f Canadian r e s e a r c h e r s i n c l u d i n g O f f i c e r and Anderson (1969), Spencer (1973), Swidinsky (1973), and Gunderson (1977). In 1961, an i n c r e a s e i n the p r o v i n c i a l unemploy-ment r a t e o f one p e r c e n t would have reduced the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e by over one h a l f o f one p e r c e n t . The r e s u l t s o b t ained f o r RBE, the r a t i o o f p u b l i c r e t i r e m e n t b e n e f i t s to t o t a l income, support the hypothesized negative r e l a t i o n s h i p found i n s t u d i e s by Gordon (1963a; 1963b), Pechman e t a l . (1968), Bowen and Finegan (1969), Gallaway (1971), Boskin (1977), Quinn (1977a; 1977b), and Burbidge and Robb (1980). In f a c t , the r e s u l t s o b t a i n e d suggest 62 t h a t i n 1961 a one p e r c e n t i n c r e a s e i n RBE would have reduced the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e by 1.03 p e r c e n t . FPR, the p r o v i n c i a l female p a r t i c i p a t i o n r a t e , showed an unexpected p o s i t i v e r e l a t i o n s h i p . T h i s c o n t r a d i c t s the r e l a t i o n s h i p h y pothesized by Long (1958), Kreps (1967), and Brennan e t a l . (1967). T h i s d i s c r e p a n c y may, i n p a r t , be e x p l a i n e d by the l a r g e simple c o r r e l a t i o n c o e f f i c i e n t between FPR and UNE of -.82 s t r o n g l y suggesting the presence o f m u l t i c o l i n e a r i t y i n the e q u a t i o n . The problems posed by the m u l t i c o l i n e a r i t y w i l l be d i s c u s s e d l a t e r i n t h i s chapter so they need not be d e a l t with here. URB, the p r o p o r t i o n of the prov-i n c i a l p o p u l a t i o n r e s i d i n g i n urban areas, n e g l i g i b l y e x p l a i n e d the v a r i a n c e i n LFPgj so the computer d i d not i n c l u d e i t i n the stepwise r e g r e s s i o n . The d e f a u l t t o l e r a n c e l e v e l s e t by the SPSS program was T = .001, meaning t h a t an independent v a r i a b l e i s entered i n t o the equation i f the p r o p o r t i o n of i t s v a r i a n c e not e x p l a i n e d by o t h e r independent v a r i a b l e s exceeds 0.1 p e r c e n t . The stepwise i n c l u s i o n r e g r e s s i o n f o r 1971 p r o v i d e s an explan-a t o r y equation which p o i n t s to the importance of OCC, RBE, and FPR as dominant v a r i a b l e s i n e x p l a i n i n g the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e i n 1971. OCC, s t a t i s t i c a l l y s i g n i f i c a n t a t the p = .10 l e v e l of s i g n i f i c a n c e , shows an unexpected negative r e l a t i o n -s h i p again p o i n t i n g to an i n v a l i d h y p o t h e s i s , or the importance of primary s e c t o r i n d u s t r i e s as a source of employment f o r the e l d e r l y . The r e s u l t s d e r i v e d suggest t h a t i n 1971 a one percent i n c r e a s e i n RBE would have decreased the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e by over 0.7 p e r c e n t . The FPR v a r i a b l e continues to show the unexpected p o s i t i v e r e l a t i o n s h i p , t h i s time w i t h no m u l t i c o l i n e a r i t y apparent from a v i s u a l i n s p e c t i o n o f the simple c o r r e l a t i o n co-e f f i c i e n t s . The reasons f o r t h i s r e l a t i o n s h i p are d i f f i c u l t to sp e c u l a t e on f o r they suggest t h a t a r i s e i n the female labour f o r c e p a r t i c i p a t i o n r a t e leads to an i n c r e a s e i n the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e . H i s t o r i c a l l y , t h i s has not been the case as r i s i n g female p a r t i c i p a t i o n r a t e s correspond?with d e c l i n i n g e l d e r l y p a r t i c i p a t i o n r a t e s . The r e s u l t s f o r URB support the hyp o t h e s i z e d negative r e l a t i o n s h i p with LFV^^ (see: Bowen and Finegan (1969); Gallaway (1971); and Munnell (1974)) suggesting t h a t , other v a r i a b l e s h e l d constant, a one percent i n c r e a s e i n the p r o p o r t i o n of the p r o v i n c i a l p o p u l a t i o n l i v i n g i n urban areas reduces the e l d e r l y ' s labour f o r c e p a r t i c i p a t i o n r a t e by 0.18 percent. In c o n t r a s t to the 1961 r e g r e s s i o n , the 1971 r e g r e s s i o n suggests the predominance of the added worker e f f e c t s i n c e UNE expresses a p o s i t i v e r e l a t i o n s h i p with LFP^^. Evidence i n the l i t e r a t u r e which agrees with t h i s f i n d i n g f o r Canadian data s e t s can be found i n Ostry (1968), Proulx (1969), Spencer and Featherstone (1970), Davis (1971), Donner and Lazar (1974), and Swan (1974). The t h i r d r e g r e s s i o n , l o o k i n g a t the f a c t o r s i n f l u e n c i n g the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e i n 1976, p o i n t s to the importance o f UNE, URB, and to a l e s s e r degree RBE and FPR. The r e s u l t s o b t a i n e d show UNE i s s i g n i f i c a n t a t the p = .05 l e v e l of s i g -n i f i c a n c e and i s n e g a t i v e l y c o r r e l a t e d with LFP^g i n d i c a t i n g the predominance of the discouraged worker e f f e c t once again. A one p e r -cent i n c r e a s e i n the p r o v i n c i a l unemployment r a t e suggests a decrease i n the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e of over 0.7 per c e n t . The URB v a r i a b l e i s s t a t i s t i c a l l y s i g n i f i c a n t a t the p = .01 l e v e l 64 of s i g n i f i c a n c e and again supports the hypothesized negative r e l a t i o n -s h i p . The r e s u l t s o b t a i n e d suggest a one percent i n c r e a s e i n the p r o p o r t i o n of the p r o v i n c i a l p o p u l a t i o n l i v i n g i n urban areas i n 1976 would have reduced the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e by almost 0.13 p e r c e n t . The r e s u l t s o b t a i n e d f o r the FPR v a r i a b l e once again support the h y p o t h e s i z e d p o s i t i v e r e l a t i o n s h i p ; however, as i n the 1961 r e g r e s s i o n , t h i s may be e x p l a i n e d by the presence of m u l t i -c o l i n e a r i t y between FPR and UNE. The simple c o r r e l a t i o n c o e f f i c i e n t between FPR and UNE i n the 1976 r e g r e s s i o n i s -.85. The RBE v a r i a b l e , c o n s i s t e n t w i t h the r e s u l t s of p r e v i o u s r e g r e s s i o n s , sup-p o r t e d the h y p o t h e s i z e d negative r e l a t i o n s h i p with a one p e r c e n t i n c r e a s e i n RBE d e c r e a s i n g LFP^g by 0.12 p e r c e n t . The f i n a l stepwise i n c l u s i o n r e g r e s s i o n was designed to h i g h -l i g h t those v a r i a b l e s i n the e q u a t i o n which accounted f o r the change i n the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e between 1961 and 1971. The r e s u l t s suggest OCC, UNE, and RBE were the three most important independent v a r i a b l e s i n e x p l a i n i n g the v a r i a n c e i n the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e between 1961 and 1971. As a c a u t i o n a r y note i t i s important to r e c o g n i z e t h a t the e x p l a n a t o r y equation d e r i v e d i n t h i s r e g r e s s i o n i s o n l y s t a t i s t i c a l l y s i g n i f i c a n t at the p = .10 l e v e l of s i g n i f i c a n c e . In summarizing the r e s u l t s of the r e g r e s s i o n a n a l y s i s , the f o u r r e g r e s s i o n s conducted suggest t h a t UNE, the p r o v i n c i a l unemployment r a t e , OCC, the p r o p o r t i o n of e l d e r l y , employed in. w h i t e - c o l l a r occu-p a t i o n s and RBE, the r a t i o of p u b l i c r e t i r e m e n t b e n e f i t s to t o t a l income, are , g e n e r a l l y , the three most important v a r i a b l e s i n e x p l a i n -ing the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n r a t e . UNE-tends to have 65 a d i s c o u r a g e d worker e f f e c t on e l d e r l y members of the labour f o r c e , although the r e s u l t s f o r 1971 i n d i c a t e a small added worker dominance. OCC, although r e p e a t e d l y e x h i b i t i n g an unexpected n e g a t i v e r e l a t i o n -s h i p , uncovers the importance o f b l u e - c o l l a r occupations as s i g n i f -i c a n t sources of employment f o r e l d e r l y workers. RBE, c o n s i s t e n t w i t h the l i t e r a t u r e reviewed i n i t s d i r e c t i o n of i n f l u e n c e but not i n i t s o v e r - a l l importance (see: Gordon (1963a; 1963b); Pechman e t a l . (1968); Bowen and Finegan (1969); Gallaway (1971); Boskin (1977); Quinn (1977a; 1977b); and Burgidge and Robb (1980)), works to reduce the number of persons 6 5 years of age and over i n the l a b o u r f o r c e . Other v a r i a b l e s i n the r e g r e s s i o n equations i n c l u d e d URB, the pro-p o r t i o n of the p r o v i n c i a l p o p u l a t i o n r e s i d i n g i n urban areas, and FPR, the p r o v i n c i a l female l a b o u r f o r c e p a r t i c i p a t i o n r a t e . Both of these v a r i a b l e s were found to be very weak c o n t r i b u t o r s to e x p l a i n i n g the v a r i a n c e of the l a b o u r f o r c e p a r t i c i p a t i o n r a t e of the e l d e r l y i n each of the three years analyzed with the e x c e p t i o n of URB i n 1976. T h i s c o n f l i c t s w i t h the f i n d i n g s o f Bowen and Finegan (1969), Gallaway (1971), and Munnell (1974) f o r the u r b a n i z a t i o n v a r i a b l e , and Long (1958), Kreps (1967), and Brennen e t a l . f o r the female p a r t i c i p a t i o n v a r i a b l e . The r e g r e s s i o n a n a l y s i s was conducted, i n p a r t , to enable a Canadian comparison w i t h U.S. s t u d i e s on the e l d e r l y ' s l a b o u r supply determinants. As has been d i s c u s s e d e a r l i e r , the hypothesized r e -l a t i o n s h i p and importance of the independent v a r i a b l e s i n c l u d e d i n t h i s study d i f f e r e d somewhat from comparable v a r i a b l e s i n c l u d e d i n U.S. s t u d i e s . American s t u d i e s tend to conclude t h a t r e c e i p t of r e t i r e m e n t b e n e f i t s i s the most important f a c t o r in : the . e l d e r l y ' s 66 l a b o u r s u p p l y d e c i s i o n . I n t h i s s t u d y , the r e t i r e m e n t b e n e f i t v a r -i a b l e was c o n s i s t e n t l y o f l e s s i m p o r t a n c e than the unemployment r a t e v a r i a b l e and the o c c u p a t i o n v a r i a b l e . The f o l l o w i n g s e c t i o n o f t h i s t h e s i s d i s c u s s e s the d e f i c i e n c i e s o f the m u l t i p l e r e g r e s s i o n a n a l y s i s c o n d ucted. The d e f i c i e n c i e s can b r o a d l y be c a t e g o r i z e d i n t o two a r e a s : (1) D e f i c i e n c i e s p a r t i c u l a r t o the d a t a s o u r c e s u t i l i z e d and how t h i s i n f l u e n c e d the c o n s t r u c t i o n o f the v a r i a b l e s i n the e q u a t i o n s . (2) D e f i c i e n c i e s p a r t i c u l a r t o the model and the r e s u l t s o b t a i n e d . C. P r i n c i p a l Data and Model D e f i c i e n c i e s  ( i ) D e f i c i e n c i e s P a r t i c u l a r t o the Data There are t h r e e major d e f i c i e n c i e s r e l a t e d t o the d a t a and the s o u r c e s u t i l i z e d f o r the r e g r e s s i o n a n a l y s i s . These are as f o l l o w s : (1) Lack o f a H e a l t h V a r i a b l e (2) Lack o f D i s a g g r e g a t e d Data (3) Other Data D e f i c i e n c i e s Each o f t h e s e w i l l now be d i s c u s s e d i n t u r n . (a) Lack o f a H e a l t h V a r i a b l e Lack o f a h e a l t h s t a t u s v a r i a b l e , o r d a t a from which a p r o x y measure f o r the e l d e r l y ' s h e a l t h s t a t u s c o u l d be d e r i v e d may be the most s i g n i f i c a n t d a t a d e f i c i e n c y . From the l i t e r a t u r e r e v i e w o f the l a b o u r s u p p l y d e t e r m i n a n t s o f the e l d e r l y i n Chapter 3, s u b s t a n t i a l e v i d e n c e o f t h e i m p o r t a n c e o f a h e a l t h s t a t u s v a r i a b l e as a f a c t o r i n f l u e n c i n g t h e e l d e r l y ' s l a b o u r s u p p l y was u n covered. A number o f 67 authors argue the s i g n i f i c a n t i n f l u e n c e of h e a l t h on an e l d e r l y per-son's d e c i s i o n t o p a r t i c i p a t e i n the l a b o u r f o r c e i n c l u d i n g B a r f i e l d and Morgan (1969), Reno (1971), Bixby (1976), Quinn (1977a; 1977b), and C l a r k and Spengler (1980). Canadian data sources o f f e r i n g measures of the h e a l t h s t a t u s o f the e l d e r l y are minimal. The o n l y Canadian data sources which p r o v i d e i n f o r m a t i o n on h e a l t h s t a t u s are the Pre Retirement Survey and the Retirement Survey conducted by S t a t i s i t i c s Canada f o r the Department of Health and Welfare as a sup-plement t o the Labour Force Survey i n February, 1975. The measure of h e a l t h s t a t u s o f f e r e d by the Pre Retirement and Retirement surveys was not u t i l i z e d i n t h i s a n a l y s i s f o r two reasons. F i r s t , i n c l u d i n g a sample from e i t h e r of the surveys would c o n f l i c t w ith the sample d e r i v e d from census sources and l e a d to p o s s i b l e sam-p l i n g b i a s . Second, the survey technique used to d e r i v e the measure of h e a l t h s t a t u s may o v e r s t a t e the importance o f h e a l t h i n the d e c i s -i o n to r e t i r e s i n c e poor h e a l t h i s g e n e r a l l y viewed as a more s o c i a l l y a c c e p t a b l e response than a d e s i r e f o r more l e i s u r e . For a d e s c r i p t i o n of the v a r i a b l e s a v a i l a b l e i n these surveys see Appendix B. The s i g n i f i c a n c e of a measure o f the e l d e r l y ' s h e a l t h s t a t u s i n many American s t u d i e s emphasizes the importance of i n c l u d i n g a s i m i l a r measure i n any Canadian s t u d i e s of the l a b o u r supply determinants, or r e t i r e m e n t d e c i s i o n o f the e l d e r l y . U n f o r t u n a t e l y , l a c k of a h e a l t h s t a t u s v a r i a b l e i n the data base employed p r e c l u d e d the i n c l u s i o n of a h e a l t h s t a t u s v a r i a b l e i n t h i s study. (b) . Lack of Disaggregated Data A second data d e f i c i e n c y which l i m i t e d the c o n s t r u c t i o n of 68 v a r i a b l e s used i n the r e g r e s s i o n a n a l y s i s was the l a c k of d i s a g g r e -gated data by age c o h o r t w i t h i n the 65 and over category. Data f o r the dependent v a r i a b l e s and the independent v a r i a b l e RBE was o n l y a v a i l a b l e f o r those e l d e r l y 65 and over. T h i s n e c e s s i t a t e d c o n s i d -e r a t i o n of the e l d e r l y as a homogeneous group comprised of males and females 6 5 and over. The " e l d e r l y " are not a homogeneous group s i n c e v a r i o u s s o c i a l , economic, and p h y s i o l o g i c a l f a c t o r s w i l l i n f l u e n c e those who have j u s t turned 65 or 66 q u i t e d i f f e r e n t l y than those who are 75 or 80 years of age. In order to a c c u r a t e l y measure the i n f l u -ence of the v a r i a b l e s i n c l u d e d i n t h i s r e g r e s s i o n a n a l y s i s of the " e l d e r l y 1 s " l a b o u r supply determinants, i t i s p r e f e r a b l e to have data disaggregated i n t o age cohorts r e p r e s e n t e d , a t minimum, by e l d e r l y i n the age 65-69, 70-74, and 75 and over c o h o r t s . (c) Other Data D e f i c i e n c i e s Other data d e f i c i e n c i e s arose which hampered the e f f i c i e n c y of t h i s study. F i r s t l y , a r e g r e s s i o n f o r the year 1966 c o u l d not be conducted as data was not a v a i l a b l e to c o n s t r u c t the dependent v a r i -a ble LFPgg, or the independent v a r i a b l e FPR, a t the p r o v i n c i a l l e v e l . Second, the independent v a r i a b l e RBE i s not a complete measure of pension b e n e f i t s s i n c e b e n e f i t s r e c e i v e d from p r i v a t e or employer pension programs c o u l d not be i n c l u d e d due to data r e s t r i c t i o n s . RBE, t h e r e f o r e , o n l y i n c l u d e s average p u b l i c pension b e n e f i t s r e c e i v e d from the O.A.S. and G.I.S. programs. ( L i ) D e f i c i e n c i e s P a r t i c u l a r to the Model There are two major d e f i c i e n c i e s r e l a t e d to the model and the s t a t i s t i c a l r e s u l t s d e r i v e d . These i n c l u d e : 69 (1) P o s s i b l e problems a s s o c i a t e d w i t h m u l t i c o l i n e a r i t y (2) P o s s i b l e b i a s i n s e l e c t i o n o f v a r i a b l e s These two p o s s i b l e sources of d e f i c i e n c i e s i n the model are d i s c u s s e d i n d e t a i l below. (a) P o s s i b l e Problems A s s o c i a t e d With M u l t i c o l i n e a r i t y M u l t i c o l i n e a r i t y i s apparent when two or more o f the independent v a r i a b l e s i n an equation are h i g h l y c o r r e l a t e d with each o t h e r . M u l t i c o l i n e a r i t y between independent v a r i a b l e s can l e a d to i n a c c u r a t e estimates o f r e g r e s s i o n c o e f f i c i e n t s f o r each v a r i a b l e . In a d d i t i o n , m u l t i c o l i n e a r i t y can r e s u l t i n very l a r g e standard e r r o r s o f the c o e f f i c i e n t s p r o v i d i n g i n a c c u r a t e e s t i m a t e s , o r apparent i n s i g n i f i c a n c e o f a c o e f f i c i e n t which i s s i g n i f i c a n t . The degree of m u l t i c o l i n e a r i t y between independent v a r i a b l e s i n an equation i s measured by the simple c o r r e l a t i o n c o e f f i c i e n t s between two or more independent v a r i a b l e s . A p e r f e c t c o r r e l a t i o n between independent v a r i a b l e s would y i e l d a simple c o r r e l a t i o n c o e f f i c i e n t of +1 or -1. Although p e r f e c t c o r r e l a t i o n i s r a r e , high simple c o r r e l a t i o n c o e f f i c i e n t s between independent v a r i a b l e s i s common. In cases i n which simple c o r r e l a t i o n c o e f f i c i e n t s between independ-ent v a r i a b l e s are c l o s e to +1 or -1, then i t i s l i k e l y t h a t m u l t i -c o l i n e a r i t y i s a problem. Of the fou r r e g r e s s i o n s run evidence of m u l t i c o l i n e a r i t y between independent v a r i a b l e s can be seen i n t h r e e . The 1961 r e g r e s s i o n y i e l d e d a simple c o r r e l a t i o n c o e f f i c i e n t between UNE and FPR of -.82. An examination of the scattergram d i s t r i b u t i o n ^ b e t w e e n these two independent v a r i a b l e s confirmed the st r o n g l i n e a r r e l a t i o n s h i p . 70 E a s t e r n p r o v i n c e s , w i t h the e x c e p t i o n of O n t a r i o , tended to have lower female p a r t i c i p a t i o n r a t e s and h i g h e r p r o v i n c i a l unemployment than western p r o v i n c e s . T h i s p o s s i b l y r e f l e c t s r e g i o n a l i z e d a t t i -tudes toward female employment, i n a d d i t i o n t o d i f f e r i n g ' employment o p p o r t u n i t i e s on the p r o v i n c i a l l e v e l . T h i s i n d i c a t e s a discouraged worker dominance f o r females and supports the f i n d i n g s o f Cain (1966), Bowen and Finegan (1969), and Swidinsky (1973). The re-'':, g r e s s i o n conducted f o r 1971 showed evidence of m u l t i c o l i n e a r i t y be-tween RBE and URB w i t h a simple c o r r e l a t i o n c o e f f i c i e n t of -.92. The scattergram d i s t r i b u t i o n between RBE and UNE f o r 1971 supported the s u s p i c i o n of m u l t i c o l i n e a r i t y . The p o i n t d i s t r i b u t i o n showed p r o v i n c e s w i t h the h i g h e s t p r o p o r t i o n of urban p o p u l a t i o n (Ontario, Quebec, B.C., and A l b e r t a ) had the lowest r a t i o of r e t i r e m e n t bene-f i t s t o t o t a l income. T h i s i s not too s u p r i s i n g s i n c e the p r o v i n c e s with the l a r g e r urban p o p u l a t i o n g e n e r a l l y tend to be c o n s i d e r e d the w e a l t h i e r p r o v i n c e s . E l d e r l y people l i v i n g i n these p r o v i n c e s have been a b l e to d e r i v e a g r e a t e r p r o p o r t i o n of t h e i r t o t a l income from sources o t h e r than p u b l i c pensions. An i n d i c a t i o n o f m u l t i -c o l i n e a r i t y i n the r e g r e s s i o n f o r 1976 was found between UNE and FPR. The simple c o r r e l a t i o n c o e f f i c i e n t i n t h i s case was -.85. Again, as i n the 1961 r e g r e s s i o n , t h i s f i n d i n g supports the d i s -couraged worker dominance f o r females. In the case where two independent v a r i a b l e s are found to e x h i b i t m u l t i c o l i n e a r i t y one s o l u t i o n to the problems c r e a t e d i s to drop one of the two independent v a r i a b l e s from the r e g r e s s i o n e q u a t i o n . Table IX shows the r e s u l t s of r e g r e s s i o n s which have dropped in d e -pendent v a r i a b l e s which were suspected of showing m u l t i c o l i n e a r i t y T a b l e IX R e s u l t s o f R e g r e s s i o n s C o r r e c t e d f o r M u l t i c o l i n e a r i t y DEPENDENT VARIABLE CONSTANT UNE URB FPR RBE OCC R 2 ADJ R 2 F RATIO LFP , 57.9 -.609 .022 Dropped -1.03 -.289 .94 .89 19.17 (9.12) (.077) (3.44) (7.75) k k LFP_, 31.5 .297 Dropped .153 -.242 -.247 .83 .70 6.40 (.502) (.915) (.706) (4.17) k k k k k k k k k k L F P ? f i 33.4 -.992 -.199 Dropped -.129 N/A .91 .88 22.19 (44.3) (14.9) (2.71) *** p = .01 ** p = .05 * P = .10 F R a t i o s o f C o e f f i c i e n t s a r e i n B r a c k e t s 72 with another independent v a r i a b l e i n the e q u a t i o n . For 1961 and 1976 FPR has been dropped from the equation, and f o r 1971 URB has been dropped. The r e s u l t s show a g e n e r a l improvement i n the s i g n i f -i cance of the r e g r e s s i o n c o e f f i c i e n t s f o r 1961 and 1976, but a decrease i n the s i g n i f i c a n c e of the c o e f f i c i e n t s f o r 1971. The dropping of FPR from the 1961 r e g r e s s i o n improved the s t a t i s t i c a l s i g n i f i c a n c e of UNE and RBE, as w e l l as i n c r e a s e d the v a r i a n c e of LFP^^ e x p l a i n e d by UNE. E x c l u d i n g FPR from the r e g r e s s i o n e q u a t i o n f o r 1976 improved both the s t a t i s t i c a l s i g n i f i c a n c e and the e x p l a n a t o r y power of UNE and RBE. By dropping URB from the 1971 r e g r e s s i o n equation the s t a t i s t i c a l s i g n i f i c a n c e of the v a r i a b l e s i n the equation was reduced. I t was hoped t h a t by dropping a v a r i a b l e which appeared to be c o l i n e a r with another the s t a t i s t i c a l s i g n i f i c a n c e of the r e g r e s s i o n c o e f f i c i e n t s would improve. The r e d u c t i o n i n the s t a t i s t i c a l s i g n i f i c a n c e o f the c o e f f i c i e n t s a f t e r dropping URB suggests t h a t URB should remain i n the r e g r e s s i o n e q u a t i o n . Evidence of m u l t i c o l i n e a r i t y i n t h i s case does not appear to be v a l i d . Summarizing the r e s u l t s of the new s e r i e s of r e g r e s s i o n s c o r -r e c t e d f o r m u l t i c o l i n e a r i t y , UNE, OCC and RBE tend to be three important independent v a r i a b l e s i n e x p l a i n i n g the v a r i a n c e i n the e l d e r l y ' s LFP. The h i g h e r c o e f f i c i e n t v a l u e s f o r the 1961 and 1976 r e g r e s s i o n s improve the e x p l a n a t o r y power of the 1961 and 1976 e q u a t i o n s . The v a l u e s of the c o e f f i c i e n t s i n the c o r r e c t e d r e g r e s s -i o n f o r 1971 decreases the e x p l a n a t o r y power of t h i s e q u a t i o n . The e l d e r l y appear most s e n s i t i v e t o the unemployment r a t e tending to withdraw from the labour f o r c e i n p e r i o d s of r i s i n g unemployment. 73 The OCC v a r i a b l e again p o i n t s to the importance of b l u e - c o l l a r jobs as s i g n i f i c a n t employers of the e l d e r l y , and p u b l i c r e t i r e m e n t b e n e f i t s a c t to encourage the withdrawal of the e l d e r l y workers from the labour f o r c e . (b)., P o s s i b l e B i a s i n the S e l e c t i o n o f V a r i a b l e s The model may be d e f i c i e n t i n one other area. There i s a p o s s i -b i l i t y t h a t the independent v a r i a b l e s RBE and UNE n e g a t i v e l y b i a s the r e s u l t s . RBE can n e g a t i v e l y b i a s the r e s u l t s s i n c e r e c e i p t of r e t i r e m e n t b e n e f i t s i s o f t e n c o n d i t i o n a l upon r e t i r e m e n t from the labour f o r c e . T h i s argument appears to have more v a l i d i t y f o r analyses based on U.S. data where a r e t i r e m e n t t e s t i s s t i l l i n e f f e c t . In Canada, however, the OkA.S. program i s u n i v e r s a l l y a p p l i -c a b l e to a l l people 65 and over. Only the G.I.S. program i s based on a means t e s t , but people can s t i l l work and r e c e i v e the G.I.S. prov i d e d t h e i r income f a l l s below a c e r t a i n l e v e l . A n e g a t i v e b i a s may a l s o be i n t r o d u c e d by u s i n g UNE as a v a r i a b l e independent of LFP. I t has been argued (Clark and Spengler (1980)) t h a t by u s i n g a dependent v a r i a b l e of the l a b o u r f o r c e p a r t i c i p a t i o n r a t e , which was c o n s t r u c t e d w i t h the s i z e of the labour f o r c e i n . t h e numerator, and an independent v a r i a b l e of the unemploy-ment r a t e , which uses the s i z e o f the l a b o u r f o r c e as i t s denominator, a negative b i a s i s i n t r o d u c e d . There i s nothing, s h o r t of c o n s t r u c t -in g a l t e r n a t i v e proxy measures f o r LFP or UNE, which can be done to c o r r e c t t h i s p o s s i b l e source of b i a s . I t i s important, however, to r e c o g n i z e i t s p o s s i b l e e x i s t e n c e and the i n f l u e n c e i t may e x e r t i n the r e l a t i o n s h i p between LFP and UNE. 74 In the following chapter the thesis concludes with an examination of two points. F i r s t , the implications of Canada's aging population and the findings of Chapter 4 are considered and some recommendations stemming from these findings are made. Second, some directions for future research i n the area of the elderly's labour supply deter-minants are discussed. 75 C h apter 5 CONCLUSION The a b s o l u t e and r e l a t i v e number o f e l d e r l y i n Canada's popu-l a t i o n i s g r o w i n g , and: i s e x p e c t e d t o c o n t i n u e t o grow w e l l i n t o the n e x t c e n t u r y . A t t h e same t i m e , t h e e l d e r l y a r e w o r k i n g l e s s . The growth o f t h e e l d e r l y p r o p o r t i o n o f the p o p u l a t i o n and the d e c l i n e i n t h e i r p a r t i c i p a t i o n i n the l a b o u r f o r c e poses a number o f i m p l i -c a t i o n s f o r p o l i c y makers and p l a n n e r s . T h i s c h a p t e r examines some o f t h e economic and s o c i a l i m p l i c a t i o n s o f p o p u l a t i o n a g i n g . I n a d d i t i o n , t h e c h a p t e r comments on some o f t h e i m p l i c a t i o n s a s s o c -i a t e d w i t h t h e f i n d i n g s o f t h e r e g r e s s i o n a n a l y s i s c o n d u c t e d t o e v a l u a t e t h e l a b o u r s u p p l y d e t e r m i n a n t s o f Canada's e l d e r l y popu-l a t i o n . F i n a l l y , t h i s c h a p t e r c o n c l u d e s w i t h a d i s c u s s i o n o f d i -r e c t i o n s f o r f u t u r e r e s e a r c h . A. I m p l i c a t i o n s o f an A g i n g S o c i e t y  ( i ) Economic The economic i m p l i c a t i o n s c r e a t e d by p o p u l a t i o n a g i n g can be grouped i n t o f o u r main a r e a s . These are as f o l l o w s : (1) The dependency burden (2) Economic p r o d u c t i v i t y (3) M o b i l i t y (4) Consumption, s a v i n g and i n v e s t m e n t (a) The Dependency Burden P e o p l e 65 y e a r s o f age and o v e r who have withdrawn from the l a b o u r f o r c e a r e , t o a l a r g e degree, dependent upon t h o s e persons who a r e s t i l l a c t i v e i n the l a b o u r f o r c e . As the a b s o l u t e and r e l a t i v e number o f e l d e r l y p e r s o n s i n the p o p u l a t i o n i n c r e a s e s the 7 6 number o f e l d e r l y dependents to people of working age (15-64) a l s o i n c r e a s e s . The f i n a n c i a l burden p l a c e d on the Canadian economy as a r e s u l t of p o p u l a t i o n aging can be enormous. Costs a s s o c i a t e d with pension programs and h e a l t h care f a c i l i t i e s to support the e l d e r l y c o u l d prove unmanageable. Higher t a x a t i o n of the working age popu-l a t i o n may be necessary t o support the e l d e r l y . An i n d i c a t i o n of the dimensions of the f i n a n c i a l burdens which c o u l d be expected as a r e s u l t of an'.increased p r o p o r t i o n of r e t i r e d e l d e r l y i n the p o p u l a t i o n i s p r o v i d e d by the Science C o u n c i l of Canada (1976). P r o j e c t i o n s of the Canada Pension P l a n (CP.P.) see 1981 as the l a s t year i n which c o n t r i b u t i o n s to the p l a n w i l l exceed b e n e f i t s p a i d out. S t a r t i n g i n 1982 the C P . P . fund w i l l begin to s h r i n k . In f a c t , assuming pres e n t c o n t r i b u t i o n r a t e s and continued loans t o the p r o v i n c e s from pension c o n t r i b u t i o n s , by the year 2025 the C P . P . i s p r o j e c t e d to be $854.9 b i l l i o n i n debt. The primary reason f o r t h i s huge d e f i c i t w i l l be the l a r g e i n c r e a s e i n pension b e n e f i c i a r i e s . In r e c e n t years Canada has ex p e r i e n c e d l a r g e i n c r e a s e s i n i t s annual r a t e of i n f l a t i o n . Should the i n f l a t i o n r a t e continue to r i s e without adjustments to pension c o n t r i b u t i o n r a t e s the c o s t of p u b l i c pension plans i n Canada, i n r e a l terms, w i l l be i n c r e a s e d f u r t h e r . The O.A.S. program i s u n i v e r s a l l y a p p l i c a b l e t o a l l Canadians 65 and over. What i s more important i n terms of a poss-.. i b l e f u t u r e f i n a n c i a l burden i s t h a t the O.A.S., as w e l l as the G.I.S., program i s indexed to the c o s t of l i v i n g . As i n f l a t i o n goes up, so too w i l l p e n sion payments. I f pensions remain indexed and i n f l a t i o n c ontinues to i n c r e a s e , without an i n c r e a s e i n the pension c o n t r i b u t i o n r a t e o r h i g h e r t a x e s t o pay f o r i n d e x e d p e n s i o n s , the p e n s i o n program c o u l d soon go b r o k e . An i n c r e a s e i n t h e p r o p o r t i o n o f e l d e r l y i n t h e p o p u l a t i o n can be e x p e c t e d t o i n c r e a s e h e a l t h c a r e c o s t s as w e l l . The e l d e r l y g e n e r a l l y r e q u i r e more m e d i c a l c a r e than any o t h e r segment o f the p o p u l a t i o n ; t h e r e f o r e , w i t h the e l d e r l y c o m p r i s i n g an i n c r e a s i n g p r o p o r t i o n o f t h e t o t a l p o p u l a t i o n i t i s r e a s o n a b l e t o assume h e a l t h c a r e c o s t s w i l l i n c r e a s e . E s t i m a t e s o f the f u t u r e h e a l t h c a r e c o s t s t o s o c i e t y are n o t y e t w e l l d e v e l o p e d . Denton and Spencer (1975), i n a computer s i m u l a t i o n o f the impact o f p o p u l a t i o n change on the r e l a t i v e burden o f h e a l t h c a r e c o s t s , c o n c l u d e t h a t t h e i r f i n d i n g s " s u g g e s t t h a t p o p u l a t i o n changes can be e x p e c t e d t o have a s u b s t a n t i a l impact on t h e c o s t o f h e a l t h c a r e i n the l o n g e r term". Many h e a l t h c a r e programs and s e r v i c e s f o r t h e e l d e r l y admin-i s t e r e d and funded on the p r o v i n c i a l l e v e l w i l l l i k e l y be f i n a n c -i a l l y p r e s s e d i n t h e f u t u r e . I n B r i t i s h C o lumbia, t h e r e a r e f i v e major h e a l t h c a r e programs d e v e l o p e d which s e r v e the e l d e r l y . These i n c l u d e t h e Pharmacare program w h i c h s u b s i d i z e s t h e c o s t o f p r e s c r i p t i o n drugs and i s u n i v e r s a l l y a p p l i c a b l e t o B.C. r e s i d e n t s 65 and o l d e r ; , t h e M e d i c a r e program w h i c h p r o v i d e s premium a s s i s t e d m e d i c a l coverage f o r most e l d e r l y ; e l d e r l y Long Term Care programs wh i c h p r o v i d e s e r v i c e s a t t h e p e r s o n a l , community, exten d e d , and a d u l t day c a r e l e v e l s ; h o s p i t a l a c u t e c a r e s e r v i c e s ; and a new D e n t a l Care program which p r o v i d e s t o t a l coverage o f a l l d e n t a l c o s t s f o r e l d e r l y r e s i d e n t s o f B.C. whose y e a r l y income f a l l s below $2,740, w i t h 50 p e r c e n t coverage f o r e l d e r l y r e s i d e n t s whose y e a r l y income i s above $2,740. 78 The f u t u r e c o s t s o f an a g i n g p o p u l a t i o n , i n terms o f i n c r e a s e d p e n s i o n and h e a l t h c a r e expenses, may be eased by the f a c t t h a t w h i l e t h e p r o p o r t i o n o f e l d e r l y dependents (65 and over) w i l l i n c r e a s e i n t h e f u t u r e , t h e p r o p o r t i o n o f young dependents (0-14) w i l l d e c r e a s e i n t h e f u t u r e . Some a u t h o r s argue t h a t t h e dependency burden caused by t h e i n c r e a s e d number o f e l d e r l y i n t h e p o p u l a t i o n w i l l be o f f s e t by t h e d e c r e a s e d number o f c h i l d and j u v e n i l e depend-e n t s ( R i d l e r (1979); and Denton and Spencer ( 1 9 8 0 ) ) . B oth R i d l e r and Denton and Spencer p r o v i d e p r o j e c t i o n s o f the o v e r - a l l depend-ency r a t i o n as e v i d e n c e t h a t Canada's f i n a n c i a l burdens w i l l not i n c r e a s e s i g n i f i c a n t l y . These a u t h o r s n e g l e c t t h e f a c t t h a t a l -though t h e o v e r - a l l dependency r a t i o may n o t change much by 2051 i t i s composed o f a d i s p r o p o r t i o n a t e amount o f e l d e r l y dependents. The c o s t a s s o c i a t e d w i t h s u p p o r t i n g an e l d e r l y dependent (pen s i o n s and h e a l t h care) a r e s u b s t a n t i a l l y h i g h e r t h a n c o s t s a s s o c i a t e d w i t h s u p p o r t i n g a young dependent ( f a m i l y a l l o w a n c e and e d u c a t i o n ) . One e s t i m a t e p l a c e s t h e p u b l i c c o s t o f s u p p o r t i n g an e l d e r l y depend-e n t a t 2.5 ti m e s more e x p e n s i v e than s u p p o r t i n g a young dependent (Weiner ( 1 9 8 1 ) ) . Even though p r o j e c t i o n s o f the o v e r - a l l dependency r a t i o s u g gest t h e r e w i l l be no added f i n a n c i a l burden p l a c e d on s o c i e t y , t h e d i s p r o p o r t i o n a t e number o f e l d e r l y i n c l u d e d i n t h e o v e r - a l l dependency r a t i o w i l l , u n q u e s t i o n a b l y , i n c r e a s e t h e f i n a n -c i a l burden. R i d l e r (1979) and Denton and Spencer (1980) a l s o n e g l e c t t h e added burdens p l a c e d on an economy w h i c h has t o change t h e p r o p o r -t i o n and amount o f e x i s t i n g s u p p o r t s e r v i c e s w h i c h p r e s e n t l y s e r v e the dependent young t o tho s e w h i c h w i l l s e r v e t h e dependent o l d . The o v e r - a l l dependency r a t i o may n o t change much, b u t we can e x p e c t 79 i n c r e a s e d f i n a n c i a l , a d m i n i s t r a t i v e , and p l a n n i n g burdens w i l l r e s u l t as programs and i n f r a s t r u c t u r e p r e s e n t l y s e r v i n g young dependent s become o b s o l e t e and new programs and i n f r a s t r u c t u r e s e r v i n g o l d dependent s have t o be d e s i g n e d . W i t h s u c h a b l e a k o u t l o o k , what a r e some o f t h e p o l i c y o p t i o n s p l a n n e r s and d e c i s i o n makers can adopt t o ease C a n a d a ' s f u t u r e e l d -e r l y dependency b u r d e n s ? W i t h r e g a r d s t o t h e huge f i n a n c i a l i m p l i -c a t i o n s po sed by t h e p e n s i o n b u r d e n , t h e r e a r e f o u r o p t i o n s a v a i l -a b l e : (1) R a i s e c o n t r i b u t i o n r a t e s and t a x e s (2) Reduce p e n s i o n b e n e f i t s (3) L e g i s l a t e a h i g h e r r e t i r e m e n t age and ban manda tory r e t i r e m e n t (4) C r e a t e i n c e n t i v e s f o r w o r k i n g l o n g e r By s i m p l y r a i s i n g c o n t r i b u t i o n r a t e s i n t o p u b l i c p e n s i o n p l a n s and t a x e s t o c o v e r t h e amount o f p e n s i o n b e n e f i t s p a i d above c o n t r i -b u t i o n s and t a x e s r e c e i v e d , t h e f e d e r a l government c o u l d keep pace w i t h t h e f i n a n c i a l p r e s s u r e s o f a g r o w i n g e l d e r l y p o p u l a t i o n . West Germany and Sweden, r e c o g n i z i n g t h e need f o r h i g h e r c o n t r i b u t i o n r a t e s , have i n c r e a s e d t h e i r e m p l o y e r - e m p l o y e e r a t e s t o 18 and 11 p e r c e n t o f employment income r e s p e c t i v e l y . A s e c o n d o p t i o n w o u l d be t o r e d u c e t h e amount o f p e n s i o n b e n e f i t s p a i d t o t h e e l d e r l y . The r e v i e w o f t h e l i t e r a t u r e i n C h a p t e r 3 , and t h e r e s u l t s o b t a i n e d i n t h e t h e s i s ' r e g r e s s i o n a n a l y s i s d i s c u s s e d i n C h a p t e r 4 , i n d i -c a t e t h a t p e n s i o n b e n e f i t s have an income e f f e c t w h i c h e n c o u r a g e s r e t i r e m e n t . R e d u c i n g p e n s i o n b e n e f i t s c o u l d encourage t h e e l d e r l y t o work l o n g e r b e f o r e a c c e p t i n g r e t i r e m e n t . By w o r k i n g l o n g e r , t h e e l d e r l y w o u l d a l s o be m a k i n g c o n t r i b u t i o n s t o t h e p e n s i o n p r o g r a m s . B o t h o f t h e s e p o l i c y o p t i o n s , p a r t i c u l a r l y t h e s e c o n d , a r e s u b j e c t t o s u b s t a n t i a l p u b l i c d i s f a v o u r a n d , as s u c h , a r e n o t l i k e l y t o be 80 p o l i t i c a l l y a c c e p t a b l e . A t h i r d o p t i o n would see t h e l e g i s l a t i o n o f a h i g h e r r e t i r e -ment age and a ban on mandatory r e t i r e m e n t . By l e g i s l a t i n g a h i g h e r r e t i r e m e n t age t h e e l d e r l y would remain a c t i v e i n t h e l a b o u r f o r c e l o n g e r , c o n t i n u e t o c o n t r i b u t e t o t h e f i n a n c i n g o f p e n s i o n programs, and reduce the p e r i o d i n w h i c h t h e y would be dependent. An example o f where a h i g h e r r e t i r e m e n t age might be l e g i s l a t e d i s i n t h e r e t i r e m e n t program f o r Canada's f e d e r a l c i v i l s e r v a n t s . Should b e n e f i c i a r i e s o f t h i s program choose t h e y can r e t i r e a t age 55 w i t h a f u l l y i n d e x e d p e n s i o n . Sheppard and R i x (1977) s u p p o r t l e g i s l a t i o n f o r a h i g h e r r e t i r e m e n t age and argue t h a t we must r e t h i n k o u r r e t i r e m e n t age p o l i c i e s and a c c e p t t h e i n e v i t a b l e e x t e n s i o n o f our a c t i v e work l i f e . B a nning mandatory r e t i r e m e n t a t a c e r t a i n age would i n c r e a s e the p r o d u c t i v e l i f e o f a w orker. Many i n d u s t r i e s have mandatory r e t i r e m e n t p o l i c i e s w hich a c t t o c u t s h o r t the p r o d u c t i v i t y o f w o r k ers and i n c r e a s e the dependency burden o f the r e t i r e d e l d e r l y . T h i s a c t i o n not o n l y i n c r e a s e s the c o s t s o f the p u b l i c p e n s i o n program, b u t o f the p r i v a t e p e n s i o n p l a n s o f i n d u s t r i e s which adopt mandatory r e t i r e m e n t p o l i c i e s as w e l l . An example o f t h e burden p l a c e d on i n d u s t r y comes from G e n e r a l Motors w h i c h , i n 1967, had 10 w o r kers on i t s p a y r o l l f o r e v e r y l i . . r e t i r e e r e c e i v i n g b e n e f i t s from i t s p e n s i o n p l a n . By 1977 the r a t i o had dropped t o 4 t o 1 and p r o j e c t i o n s f o r e c a s t a 1 t o 1 r a t i o a f t e r 1990 (Newsweek ( 1 9 7 7 ) ) . The f o u r t h o p t i o n a v a i l a b l e t o ease the f i n a n c i a l p a i n o f the p e n s i o n burden i s t o d e v e l o p p o l i c i e s w hich p r o v i d e i n c e n t i v e s f o r t h e e l d e r l y t o work l o n g e r . By w o r k i n g l o n g e r the e l d e r l y i n c r e a s e 81 t h e s i z e o f the l a b o u r f o r c e and, i n d o i n g so, c r e a t e a l a r g e r c o n t r i b u t i o n base from w h i c h p e n s i o n payments can be d e r i v e d . Of c o u r s e , any p o l i c i e s w h i c h work t o i n c r e a s e the s i z e o f t h e l a b o u r f o r c e w i l l e n l a r g e the c o n t r i b u t i o n base; however, p o l i c i e s which encourage th e e l d e r l y t o work l o n g e r a t t a c k the p e n s i o n burden a t i t s s o u r c e . A l t h o u g h Canada has not i n i t i a t e d any programs which p r o v i d e i n c e n t i v e s t o the e l d e r l y t o work l o n g e r a number o f o t h e r c o u n t r i e s have. H a r r y W e i t z (1980) documents some o f t h e s e programs. West Germany has i n t r o d u c e d b o t h f l e x i b l e r e t i r e m e n t l e g i s l a t i o n whereby a worker can work p a s t the age o f r e t i r e m e n t i f he so chooses, and i n c r e a s e d p e n s i o n b e n e f i t s t o workers who work beyond age 65. The West German program i n c r e a s e s b e n e f i t s by 0.6 p e r c e n t f o r each month worked p a s t t h e age o f 65 up t o age 70. France has adopted s i m i l a r i n c e n t i v e s i n c r e a s i n g t h e amount o f p r e r e t i r e m e n t e a r n i n g s c o v e r e d by t h e i r p e n s i o n program from 45.3 p e r c e n t t o 68.0 p e r c e n t i f r e t i r e m e n t i s postponed t o age 70. The U n i t e d Kingdom i n c r e a s e s p e n s i o n b e n e f i t s by 6.5 p e r c e n t f o r each y e a r t h a t r e t i r e m e n t i s d e l a y e d b e f o r e age 70 f o r men and 65 f o r women. F i g u r e s f o r 1970 i n d i c a t e t h a t o n e - t h i r d o f the males and o n e - q u a r t e r o f the females i n t h e U.K., t o which the p l a n was a p p l i c a b l e , d e l a y e d t h e i r r e t i r e -ment. The U n i t e d S t a t e s a d m i n i s t r a t i o n has l e g i s l a t i o n i n p l a c e w h i c h , b e g i n n i n g i n 1982, w i l l i n c r e a s e r e t i r e m e n t b e n e f i t s by 3 p e r c e n t f o r each y e a r r e t i r e m e n t i s postponed p a s t age 65. I n a d d i t i o n , the U.S. government i s c o n t e m p l a t i n g l e g i s l a t i o n w hich e f f e c t i v e l y w i l l ban mandatory r e t i r e m e n t . 82 (b) P r o d u c t i v i t y I t i s i m p o r t a n t t o r e c o g n i z e the p o s s i b l e i m p l i c a t i o n s an a g i n g and l e s s e c o n o m i c a l l y p r o d u c t i v e s o c i e t y can have on i n d i v i d -u a l and n a t i o n a l economic p r o d u c t i v i t y . As an i n d i v i d u a l ages he undergoes p h y s i o l o g i c a l t r a n s f o r m a t i o n s w h i c h reduce b o t h h i s p h y s i c a l and m e n t a l p r o d u c t i v i t y . Ghez and B e c k e r (1975) i n t h e i r t h e o r e t i c a l model o f an i n d i v i d u a l ' s a l l o c a t i o n o f time t h r o u g h the l i f e - c y c l e v i ewed o l d age as a time when an i n d i v i d u a l ' s p r o d u c t -i v i t y i s low. The i n c r e a s e d i n c i d e n c e o f e l d e r l y i n d i v i d u a l s on a n a t i o n a l s c a l e can have s e r i o u s i m p l i c a t i o n s f o r the p r o d u c t i v i t y o f an economy. A number o f a g e - r e l a t e d d e g e n e r a t i v e d i s e a s e s reduce t h e phys-i c a l p r o d u c t i v i t y o f the e l d e r l y (U.N. ( 1 9 5 6 ) ) . A s t u d y by Johns Hopkins U n i v e r s i t y o f t h e e l d e r l y , d e f i n e d as t h o s e p e r s o n s 65 and o v e r , r e v e a l e d t h a t 8 0 p e r c e n t o f t h e i r sample s u f f e r e d from one o r more " c h r o n i c " d i s e a s e s g e n e r a l l y i n v o l v i n g major organs (Newsweek ( 1 9 7 7 ) ) . Newsweek magazine r e p o r t s t h a t t h e e l d e r l y occupy one t h i r d o f t h e h o s p i t a l beds i n the U.S. and a c c o u n t f o r two o u t o f e v e r y f i v e g e n e r a l m e d i c a l o f f i c e v i s i t s . The U n i t e d N a t i o n s r e p o r t s (1956) t h a t w o r k ers aged 60 t o 64 m i s s e d a l m o s t f i v e t i m e s more w o r k i n g days due t o i l l n e s s t han workers 17 t o 59 y e a r s o f age. W h i l e t h e i n c i d e n c e o f p h y s i c a l d i s e a s e i n c r e a s e s i n t h e e l d -e r l y , a number o f r e s e a r c h e r s argue t h a t the e l d e r l y ' s m e n t a l p r o d -u c t i v i t y remains comparable t o t h a t o f younger i n d i v i d u a l s i n -c l u d i n g F r i e n d and Zubek (1958); R i l e y and Foner (1968); Clemente and H e n d r i c k s (1973); and Sheppard and R i x (1977). These f i n d i n g s 83 c o n t r a s t s h a r p l y w i t h t h o s e from o t h e r s o u r c e s w h i c h argue t h a t m e n t a l a b i l i t i e s d r a m a t i c a l l y d e c r e a s e w i t h age (Lehman (1953); Brennan e t a l . (1967); Newsweek (1977); and Rosenberg and Grad (1980)). One o f the more s e r i o u s m e n t a l d i s e a s e s which a f f e c t s the e l d -e r l y and reduces t h e i r m e n t a l p r o d u c t i v i t y i s an i n c u r a b l e d i s e a s e known as S e n i l e Dementia. Recent r e p o r t s i n d i c a t e t h a t i t a f f e c t s between 5 and 10 p e r c e n t o f the U.S. e l d e r l y p o p u l a t i o n (Newsweek (1977)). I t s symptoms i n c l u d e d i s o r i e n t a t i o n , l o s s o f memory o f b o t h r e c e n t and p a s t e v e n t s , and i n a b i l i t y t o p e r f o r m such r o u t i n e t a s k s as t y i n g s h o e l a c e s . More common p s y c h o l o g i c a l a i l m e n t s a f f l i c t i n g t h e e l d e r l y w h i c h can reduce t h e i r m e n t a l p r o d u c t i v i t y i n c l u d e d e p r e s s i o n , h y p o c h o n d r i a , and p a r a n o i a . The i n c r e a s e d i n c i d e n c e o f e l d e r l y i n d i v i d u a l s on a n a t i o n a l s c a l e can have s e r i o u s i m p l i c a t i o n s f o r the p r o d u c t i v i t y o f an economy. The magnitude o f t h i s i m p a ct w i l l u l t i m a t e l y depend on two f a c t o r s . F i r s t , t h e p r o p o r t i o n o f e l d e r l y i n the p o p u l a t i o n ; and second, f u t u r e " m e d i c a l advances which w i l l keep t h e e l d e r l y p h y s i c a l l y and m e n t a l l y p r o d u c t i v e . (c) M o b i l i t y A p o p u l a t i o n ' s m o b i l i t y , b o t h v e r t i c a l and h o r i z o n t a l , can be e x p e c t e d t o be i n f l u e n c e d by p o p u l a t i o n a g i n g . W i t h a p o p u l a t i o n a g i n g , m o b i l i t y can be e x p e c t e d t o d e c r e a s e b o t h on a v e r t i c a l l e v -e l and on a h o r i z o n t a l l e v e l . The v e r t i c a l m o b i l i t y , o r o p p o r t u n i t y f o r upward movement i n a h i e r a r c h i c a l s t r u c t u r e , can be e x p e c t e d t o d e c r e a s e as t h e pop-84 u l a t i o n ages (Sauvy (1948),; K e y f i t z (1973); Newsweek (1977); and We i t z ( 1 9 8 0 ) ) . As C l a r k and S p e n g l e r (1980) p o i n t o u t , t h e d e c r e a s e i n v e r t i c a l m o b i l i t y i s p r i m a r i l y t h e r e s u l t o f a s l o w i n g down o f p o p u l a t i o n growth and n o t as a r e s u l t o f i n c r e a s e d l i f e e x p e c t a n c y . In an i n t e r v i e w w i t h Newsweek (1977) ^eminent demographer P e t e r M o r r i s o n acknowledges the d e c r e a s e o f v e r t i c a l m o b i l i t y i n the f u t u r e and a t t r i b u t e s i t t o a m a t u r a t i o n o f t h e baby-boom gener-a t i o n . M o r r i s o n b e l i e v e s c o m p e t i t i o n f o r j o b s and promotions a t a l l l e v e l s i n t h e f u t u r e w i l l be g r e a t , and reduced economic growth, a consequence o f d e c l i n i n g a g g r e g a t e demand caused by s l o w i n g p o p u l a t i o n growth, w i l l n o t l e a d t o s u b s t a n t i a l j o b c r e a t i o n . H o r i z o n t a l m o b i l i t y , o r j o b - r e l a t e d m i g r a t i o n , can be e x p e c t e d t o be reduced as the p o p u l a t i o n ages. The e l d e r l y a re more seden-t a r y and t e n d t o l o c a t e themselves i n urban a r e a s ( P a i l l a t (1976); and Shulman ( 1 9 8 0 ) ) . The i m p l i c a t i o n s o f t h i s f o r an economy based l a r g e l y on f r o n t i e r r e s o u r c e development can be s i g n i f i c a n t . The i m p l i c a t i o n s o f an a g i n g , more s e d e n t a r y , p o p u l a t i o n can be s i g n i f i -c a n t f o r more s e c t o r a l l y d i v e r s e and dynamic economies as w e l l . C l a r k and S p e n g l e r (1980) p o i n t o u t t h a t m o b i l i t y " i s e s s e n t i a l t o the optimum employment o f human and o t h e r r e s o u r c e s i n dynamic modern economies s u b j e c t t o c o n t i n u o u s change i n c o m p o s i t i o n o f o u t -put and o c c u p a t i o n s . " (d) Consumption, S a v i n g , and Investment Consumption, s a v i n g , and i n v e s t m e n t p a t t e r n s o f the e l d e r l y a r e s i g n i f i c a n t l y d i f f e r e n t from th o s e o f younger a g e o c o h o r t s . A l a r g e p r o p o r t i o n a t e i n c r e a s e i n Canada's e l d e r l y p o p u l a t i o n can 85 have i m p l i c a t i o n s on t h e consumption, s a v i n g , and i n v e s t m e n t pat-. . t e r n s o f the economy as a whole. The consumer demands o f a younger p o p u l a t i o n a r e c o n s i d e r a b l y d i f f e r e n t from t h o s e o f an a g i n g p o p u l a t i o n . On an i n d i v i d u a l b a s i s , as a p e r s o n ages h i s consumption d e c r e a s e s ; p r i m a r i l y the r e s u l t o f reduced e a r n i n g s caused by d e c r e a s e d p r o d u c t i v i t y (Heckman (1 9 7 6 ) ) . T h e r e f o r e , as a p o p u l a t i o n ages i t i s r e a s o n a b l e t o e x p e c t e x p e n d i t u r e s made on f o o d s t u f f s , consumer goods, s e r v i c e s , and h o u s i n g t o d e c r e a s e . C o r p o r a t e s e c t o r s p r e s e n t l y engaged i n s a t i s f y i n g the demands o f a younger p o p u l a t i o n w i l l e n c o u n t e r r e d u c e d p r o f i t s as the p o p u l a t i o n ' s t a s t e s s h i f t (Newsweek (1977); and Weiner ( 1 9 8 1 ) ) . S a v i n g , o r c a p i t a l f o r m a t i o n , * i s a key i n g r e d i e n t o f economic growth. An i n c r e a s e i n the p r o p o r t i o n and number o f p e o p l e 6 5 y e a r s o f age and o v e r i n an economy can i n f l u e n c e the amount o f s a v i n g , o r c a p i t a l f o r m a t i o n , and, t h u s , the r a t e o f economic growth i n an economy. G e n e r a l l y , t h e e l d e r l y have u n f a v o u r a b l e s a v i n g p a t t e r n s (Brady (1955); and N a g a t a n i ( 1 9 7 2 ) ) ; however, as C l a r k and S p e n g l e r (1980) p o i n t o u t , an i n c r e a s e i n the o v e r - a l l average age o f the p o p u l a t i o n may i n c r e a s e s a v i n g . C l a r k and S p e n g l e r argue t h a t a more mature p o p u l a t i o n c o n t a i n s a g r e a t e r p r o p o r t i o n o f p e o p l e between 45 and 64 y e a r s o f age. T h i s i s i m p o r t a n t because 45 t o 64 tends t o be b o t h the peak e a r n i n g and s a v i n g y e a r s i n the l i f e -c y c l e . The amount o f s a v i n g o r c a p i t a l f o r m a t i o n i n an economy w i l l be c o n d i t i o n e d by t h e number o f e l d e r l y dependents as w e l l . S h o u l d t a x e s have t o be i n c r e a s e d t o m a i n t a i n s o c i a l s e c u r i t y programs the amount o f s a v i n g w i l l be red u c e d . 86 A n o t h e r i m p o r t a n t i n g r e d i e n t o f t h e economic growth p r o c e s s i s i n v e s t m e n t o f accumulated c a p i t a l . P o p u l a t i o n a g i n g can be e x p e c t e d t o reduce t h e amount o f v e n t u r e c a p i t a l , o r " r i s k " c a p i t a l , a v a i l -a b l e i n an economy. The e l d e r l y a r e t r a d i t i o n a l l y much more l i k e l y t o i n v e s t t h e i r s a v i n g s i n s e c u r e a r e a s such as government bonds, term d e p o s i t s , b l u e c h i p e q u i t i e s , and c o l l e c t i b l e s as hedges a g a i n s t i n f l a t i o n . A d e c r e a s e i n t h e amount o f v e n t u r e c a p i t a l a v a i l a b l e c o u l d l e a d t o s l u g g i s h n e s s , and even d e c l i n e , i n t h e econ-omy. As Sauvy (1948) s t a t e s : I n c o u n t r i e s s u f f e r i n g from a g i n g , t h e s p i r i t o f e n t e r p r i s e , and hence th e w i l l i n g n e s s t o a c c e p t r i s k s w i t h o u t w h i c h c a p i t a l i s m cannot f u n c t i o n , g r a d u a l l y a t r o p h i e s and i s r e p l a c e d by a new f e e l i n g : t h e d e s i r e f o r s e c u r i t y . (p. 118) ( i i ) S o c i a l There i s v i r t u a l l y an i n f i n i t e number o f s o c i a l i m p l i c a t i o n s stemming from p o p u l a t i o n a g i n g and d e c l i n i n g e l d e r l y l a b o u r s u p p l y . An aged p o p u l a t i o n has d i f f e r e n t s o c i o l o g i c a l and c u l t u r a l a t t i t u d e s and v a l u e s t h a n a younger p o p u l a t i o n . The t e n s i o n s and c o n f l i c t s g e n e r a t e d by t h e s e d i f f e r e n c e s can be e x p e c t e d t o r i p p l e t h r o u g h s o c i e t y i n t h e f u t u r e . I n t e r g e n e r a t i o n a l h o s t i l i t y may i n c r e a s e as a r e s u l t o f d e c l i n i n g e l d e r l y l a b o u r s u p p l y . Younger g e n e r a t i o n s may r e s e n t h a v i n g t o s u p p o r t a growing e l d e r l y dependent p o p u l a t i o n and accuse the e l d e r l y o f r e d u c i n g t h e i r s t a n d a r d o f l i v i n g . F o r p l a n n e r s and d e c i s i o n makers concerned w i t h the s o c i a l i m p l i c a t i o n s o f an a g i n g and l e s s e c o n o m i c a l l y p r o d u c t i v e s o c i e t y two o f the more i m p o r t a n t a r e a s e f f e c t s w i l l be f e l t a r e : (1) I n t h e p o l i t i c a l a r e a (2) I n the p l a n n i n g and a d m i n i s t r a t i o n o f s e r v i c e s 87 (a) P o l i t i c a l I m p l i c a t i o n s As t h e number and r e l a t i v e p r o p o r t i o n o f e l d e r l y i n t h e popu-l a t i o n i n c r e a s e s a s t r o n g e r p o t e n t i a l p o l i t i c a l f o r c e i n c r e a s e s as w e l l . The i n f l u e n c e t h i s g r owing p r o p o r t i o n o f t h e e l e c t o r a t e w i l l have on f u t u r e p o l i t i c a l d i r e c t i o n w i l l depend, t o a l a r g e degree, on the amount o f p o l i t i c a l o r g a n i z a t i o n t h e e l d e r l y e x h i b i t . H i s t o -r i c a l l y , t h e e l d e r l y have had h i g h e r v o t e r t u r n o u t s t h a n younger age c o h o r t s however, t h e y g e n e r a l l y have n o t tended t o v o t e as a b l o c (Newsweek ( 1 9 7 9 ) ) . E v i d e n c e o f i n c r e a s i n g e l d e r l y p o l i t i c a l o r g a n i z a t i o n i s grow-i n g . I n t h e U n i t e d S t a t e s t h e r e a r e l o b b y i s t groups c o m p r i s e d o f e l d e r l y c i t i z e n s . O r g a n i z a t i o n s such as the American A s s o c i a t i o n o f R e t i r e d P e r s o n s , t h e "Gray P a n t h e r s " , and " S e n i o r Power" a r e demanding more r e c o g n i t i o n from th e U.S. p o l i t i c a l i n f r a s t r u c t u r e (Newsweek ( 1 9 7 7 ) ) . As W e i t z (1980) p o i n t s o u t , any measure d e s i g n e d t o d e a l w i t h the a n t i c i p a t e d problems o f an i n c r e a s e d e l d e r l y p o p u l a t i o n w i l l be s u b j e c t t o the p o l i t i c a l r e a c t i o n o f the e l d e r l y . The s t r e n g t h o f t h i s r e a c t i o n w i l l , u n q u e s t i o n a b l y , i n f l u e n c e t h e f o r m a t i o n o f p o l i c i e s and p r o p o s a l s . Two p o s s i b l e problem a r e a s i n the f u t u r e w i l l be t h e f o r m u l a t i o n and i m p l e m e n t a t i o n o f p o l i c i e s and programs c o n c e r n i n g s o c i a l s e c u r i t y , and h e a l t h - c a r e . (b) P l a n n i n g and A d m i n i s t r a t i v e I m p l i c a t i o n s As t h e number and p r o p o r t i o n o f e l d e r l y i n Canada 1s p o p u l a t i o n i n c r e a s e , p l a n n i n g , p r o g r a m i n g , f i n a n c i n g , and d e l i v e r i n g programs and s e r v i c e s f o r the e l d e r l y w i l l p l a c e added burdens on p l a n n e r s , a d m i n i s t r a t o r s , and d e c i s i o n makers. The problems c r e a t e d by an 88 aging and less economically productive population w i l l face these professionals at a l l l e v e l s at which the eld e r l y ' s programs and services are delivered. Pension programs, designed to provide economic security for the r e t i r e d e l d e r l y , w i l l be one of the most important areas of planning and p o l i c y formation i n the future. I t w i l l c e r t a i n l y not, however, be the only area challenging the s k i l l s of planners, administrators, and decision makers. A number of other programs and services d i -rected toward the e l d e r l y w i l l grow i n importance as the population ages. These include programs and services related to the e l d e r l y ' s physical, mental and dental health; n u t r i t i o n and food requirements; environmental requirements including special housing and l i v i n g arrangements; employment opportunities and other opportunities for economic self-support; educational opportunities, p a r t i c u l a r l y job r e - t r a i n i n g ; special transportation and communication requirements; opportunities for c i v i c and community p a r t i c i p a t i o n ; and special l e i s u r e and recreational requirements. As alluded to e a r l i e r , the e l d e r l y tend to locate themselves i n urban areas ( P a i l l a t (1976); and Shulman (1980)0. Should t h i s trend continue c i t y and metropolitan regional planners and adminis-tr a t o r s w i l l f i n d the problems of planning and d e l i v e r i n g programs and services increased at t h e i r l e v e l . An example of the problems professionals on t h i s l e v e l may face can be taken from transport-ation planning. E f f i c i e n t transportation systems are important to the e l d e r l y as a means of l i n k i n g the e l d e r l y with an array of programs and services designed for them. Studies have shown (U.S. 'Senate (1977)) 89 t h a t e x i s t i n g t r a n s p o r t a t i o n s e r v i c e s i n t h e U.S. are i l l - s u i t e d t o t h e needs o f t h e e l d e r l y . I n t h e f u t u r e , t r a n s p o r t a t i o n p l a n -n e r s i n t h e U.S. w i l l have t o p l a n f o r more and b e t t e r p u b l i c t r a n s p o r t a t i o n s e r v i c e s i n tune w i t h t h e s p e c i a l needs o f t h e e l -d e r l y who t e n d t o be p h y s i c a l l y f r a i l , o f low m o b i l i t y , and poor. I t i s i m p o r t a n t t h a t p l a n n e r s and a d m i n i s t r a t o r s i n v o l v e d w i t h p r o v i d i n g programs and s e r v i c e s t o t h e e l d e r l y , and t h o s e n ot i n v o l v e d w i t h programs f o r t h e e l d e r l y , b e g i n making demand p r o j e c -t i o n s , and conduct r e s e a r c h i n t o the needs o f t h e e l d e r l y . I n v e s t -i g a t i o n a t a l l l e v e l s i n t o what s e r v i c e s and programs e x i s t t o s e r v e t h e e l d e r l y , t h e i r adequacy, and t h e i r gaps s h o u l d be i n -i t i a t e d . P l a n n e r s i n t h e f u t u r e w i l l have t o adapt programs and s e r v i c e s t o an a g i n g p o p u l a t i o n . They w i l l f a c e problems i n v o l v e d w i t h f o r m u l a t i n g p o l i c i e s , d e t e r m i n i n g p l a n n i n g s t r a t e g i e s , and a l l o -c a t i n g s c a r c e r e s o u r c e s . The ease w i t h w h i c h t h e s e problems can be d e a l t w i t h i n t h e f u t u r e depends, t o a l a r g e degree, on b o t h g r e a t e r u n d e r s t a n d i n g o f the needs o f t h e e l d e r l y p o p u l a t i o n and the f a c t o r s c a u s i n g d e c l i n i n g e l d e r l y l a b o u r f o r c e p a r t i c i p a t i o n , as w e l l as t h e amount o f p r e p a r a t i o n we t a k e t o address t h e s e p o t e n t i a l problems to d a y . ( i i i ) I m p l i c a t i o n s o f t h e R e g r e s s i o n A n a l y s i s I n c o n t r a s t t o t h e f i n d i n g s o f a number o f r e s e a r c h e r s i n t h e U n i t e d S t a t e s (Gordon (1963a; 1963b); Pechman e t a l . (1968); Bowen and F i n e g a n (1969); G a l l a w a y (1971); B o s k i n (1977); and Quinn (1977a; 1977b)) and B u r b i d g e and Robb (1980) i n Canada, t h i s s t u d y found 90 t h e r e t i r e m e n t b e n e f i t v a r i a b l e t o be o f l e s s i mportance i n ex-p l a i n i n g t h e v a r i a n c e i n the e l d e r l y ' s l a b o u r f o r c e p a r t i c i p a t i o n i n Canada th a n v a r i a b l e s measuring th e r a t e o f unemployment, and t h e e l d e r l y ' s o c c u p a t i o n . T h i s r e s u l t p o i n t s t o the d i f f e r e n c e s g o v e r n i n g t h e r e t i r e m e n t d e c i s i o n o f e l d e r l y Canadians and e l d e r l y A m e r i c a n s . I n a d d i t i o n , the r e g r e s s i o n a n a l y s i s o f t h e e l d e r l y ' s l a b o u r s u p p l y d e t e r m i n a n t s found v e r y weak e v i d e n c e t o s u p p o r t the i m p o r t a n c e o f u r b a n i z a t i o n (Bowen and F i n e g a n (1969); G a l l a w a y (1971); and M u n n e l l (1974)) and female l a b o u r f o r c e p a r t i c i p a t i o n (Long (1958); Kreps (1967); and Brennan e t a l . (1967)) as f a c t o r s i n f l u e n c i n g the e l d e r l y 1 s r e t i r e m e n t d e c i s i o n i n Canada. The r e g r e s s i o n r e s u l t s were somewhat d i s a p p o i n t i n g i n terms o f the s t a t i s t i c a l s i g n i f i c a n c e o f the i n d i v i d u a l r e g r e s s i o n c o e f f i c i e n t s i n t h e e q u a t i o n . The e x p l a n a t o r y e q u a t i o n s d i d , how-e v e r , t e n d t o p o i n t t o the unemployment r a t e , the type o f o c c u -p a t i o n chosen, and the r e c e i p t o f p e n s i o n b e n e f i t s as i m p o r t a n t f a c t o r s e x p l a i n i n g the d e c l i n i n g l a b o u r f o r c e p a r t i c i p a t i o n r a t e o f the e l d e r l y . What, t h e n , a r e t h e i m p l i c a t i o n s o f t h e s e f i n d i n g s f o r p l a n n e r s and p o l i c y makers i n Canada? Unemployment g e n e r a l l y tended t o have a d i s c o u r a g i n g i n f l u e n c e on e l d e r l y l a b o u r f o r c e p a r t i c i p a t i o n . The e l d e r l y q u i t e o f t e n r e t i r e when unemployed r a t h e r than f a c e t h e t a s k o f f i n d i n g new employment i n a l a b o u r market t h a t d i s f a v o u r s h i r i n g e l d e r l y em-p l o y e e s . T h i s f i n d i n g c o u l d p o s s i b l y a s s i s t p l a n n e r s and p o l i c y makers h o p i n g t o ease th e p o t e n t i a l economic burdens c r e a t e d by an i n c r e a s i n g number o f r e t i r e d e l d e r l y . I t might be p o s s i b l e t o d e s i g n programs w h i c h c r e a t e employment o p p o r t u n i t i e s , i f o n l y on 91 a p a r t - t i m e b a s i s , f o r t h e e l d e r l y a n d , t h e r e b y , r e d u c e t h e e l d e r -l y ' s d e p e n d e n c y b u r d e n . P r o g r a m s w h i c h o f f e r j o b r e t r a i n i n g o r s e c o n d c a r e e r p l a n n i n g w o u l d a l s o h e l p t o k e e p t h e e l d e r l y e m p l o y e d a n d l e s s d e p e n d e n t o n t h e r e s t o f s o c i e t y . I f u n e m p l o y m e n t i s a s i m p o r t a n t a f a c t o r i n t h e e l d e r l y ' s w i t h d r a w a l f r o m t h e l a b o u r f o r -c e a s t h e r e g r e s s i o n a n a l y s i s i n t h i s s t u d y s u g g e s t s , t h e n , i n o r d e r t o e a s e f u t u r e e c o n o m i c b u r d e n s , p o l i c i e s a n d p r o g r a m s w h i c h e n c o u r a g e e l d e r l y e m p l o y m e n t s h o u l d b e f o r m u l a t e d . T h e t y p e o f o c c u p a t i o n c h o s e n b y a n e l d e r l y p e r s o n i s i m p o r t a n t s i n c e i t a f f e c t s h o w l o n g h e w i l l s t a y i n t h e l a b o u r f o r c e . E l d e r l y p e r s o n s e m p l o y e d i n w h i t e - c o l l a r o c c u p a t i o n s t e n d t o s t a y w o r k i n g l o n g e r t h a n e l d e r l y p e r s o n s e m p l o y e d i n b l u e - c o l l a r o c c u p a t i o n s . T h e i m p l i c a t i o n s o f t h i s f i n d i n g a r e i m p o r t a n t s i n c e , a s C a n a d a ' s i n d u s t r i a l s t r u c t u r e m a t u r e s i n t o t h e n e x t c e n t u r y a n d m o r e p e o p l e b e c o m e e m p l o y e d i n s e c o n d a r y a n d t e r t i a r y w h i t e - c o l l a r i n d u s t r i e s t h a n i n p r i m a r y b l u e - c o l l a r i n d u s t r i e s , p e o p l e m a y s e l e c t t o w o r k l o n g e r b y c h o i c e . T h e e v o l u t i o n i n t o a n e c o n o m y w i t h a h i g h e r p r o -p o r t i o n o f w h i t e - c o l l a r w o r k e r s m a y o f f s e t ' - . t h e f i n a n c i a l b u r d e n s e x p e c t e d a s a r e s u l t o f a n i n c r e a s e i n t h e p r o p o r t i o n o f e l d e r l y d e p e n d e n t s . T h e r e g r e s s i o n a n a l y s i s a l s o s u g g e s t e d t h a t r e c e i p t o f r e t i r e -m e n t b e n e f i t s d i s c o u r a g e d t h e e l d e r l y f r o m p a r t i c i p a t i n g i n t h e l a b o u r f o r c e . T h i s f i n d i n g h a s s o m e i m p l i c a t i o n s f o r p l a n n e r s a n d p o l i c y m a k e r s . I f t h e e l d e r l y a r e w i t h d r a w i n g f r o m t h e l a b o u r f o r c e b e c a u s e o f t h e i n c o m e e f f e c t o f p e n s i o n b e n e f i t s , t h e n p o l i c i e s a n d p r o g r a m s w h i c h r e d u c e o r l i m i t t h e a v a i l a b i l i t y o f p u b l i c p e n s i o n b e n e f i t s m a y b e n e c e s s a r y t o k e e p t h e e l d e r l y w o r k i n g a n d c o n t r i b -92 u t i n g t o p e n s i o n funds l o n g e r , and t o a v o i d f u t u r e f i n a n c i a l d i s -a s t e r . Such p o l i c i e s and programs i n c l u d e i n c r e a s i n g the r e t i r e -ment age, o r i n c r e a s i n g t h e amount o f b e n e f i t s p a i d t h e l o n g e r one works p a s t th e age o f 65. V a r i a b l e s measuring u r b a n i z a t i o n and t h e amount o f female l a b o u r f o r c e p a r t i c i p a t i o n were found t o be weak c o n t r i b u t o r s t o e x p l a i n i n g the v a r i a n c e i n t h e e l d e r l y 1 s l a b o u r f o r c e p a r t i c i p a t i o n . T h i s f i n d i n g s u g g e s t s t o p l a n n e r s and p o l i c y makers t h a t , i n t h e i r e f f o r t s t o keep the e l d e r l y w o r k i n g l o n g e r , t h e y w i l l meet w i t h l i t t l e s u c c e s s s h o u l d t h e y implement p o l i c i e s w h i c h a l t e r the r a t e o f u r b a n i z a t i o n o r female l a b o u r f o r c e p a r t i c i p a t i o n . The r e s u l t s o b t a i n e d i n t h i s s t u d y s u g g e s t t h a t i n o r d e r t o keep the e l d e r l y w o r k i n g l o n g e r and l e s s dependent on p u b l i c p r o -grams and s e r v i c e s , p o l i c i e s w hich f o c u s on r e d u c i n g t h e o v e r - a l l unemployment r a t e , i n c r e a s i n g t h e p r o p o r t i o n o f e l d e r l y employed i n w h i t e - c o l l a r o c c u p a t i o n s , and r e d u c i n g the amount o f p u b l i c p e n s i o n b e n e f i t s p a i d as a p r o p o r t i o n o f t o t a l income s h o u l d be implemented. P o l i c i e s w h i c h reduce the o v e r - a l l unemployment r a t e and i n c r e a s e the p r o p o r t i o n o f e l d e r l y employed i n w h i t e - c o l l a r o c c u p a t i o n s a r e p o l i t i c a l l y more a c c e p t a b l e t h a n p o l i c i e s w h i c h reduce the amount o f p u b l i c p e n s i o n b e n e f i t s p a i d . As such, p o l i c i e s d e s i g n e d t o i n c r e a s e t h e e l d e r l y ' s l a b o u r f o r c e p a r t i c i -p a t i o n r a t e by r e d u c i n g the amount o f p u b l i c p e n s i o n b e n e f i t s p a i d s h o u l d be implemented as a l a s t r e s o r t . P o l i c i e s w hich c u t back p u b l i c p e n s i o n b e n e f i t s may not be p o l i t i c a l l y o r p u b l i c l y : . . a c c e p t a b l e , however, the consequence o f n o t a d o p t i n g such p o l i c i e s a r e e q u a l l y , i f n o t more, u n a c c e p t a b l e . 93 B. D i r e c t i o n s f o r F u t u r e Research The most i m p o r t a n t a d d i t i o n i n any f u t u r e e x p l a n a t o r y model o f the e l d e r l y ' s l a b o u r s u p p l y d e t e r m i n a n t s i n Canada would be a v a r i a b l e measuring the e l d e r l y ' s h e a l t h s t a t u s . The d a t a s e t employed i n t h i s s t u d y d i d not a l l o w a v a r i a b l e measuring h e a l t h s t a t u s t o be d e r i v e d . There a r e , however, two d a t a s e t s a v a i l a b l e w h i c h would a l l o w a h e a l t h s t a t u s v a r i a b l e t o be c o n s t r u c t e d . These i n c l u d e the Pre R e t i r e m e n t and R e t i r e m e n t s u r v e y s conducted by S t a t i s t i c s Canada f o r t h e Department o f H e a l t h and W e l f a r e i n F e b r u a r y o f 1975 as supplements t o the monthly Labour F o r c e Survey. The d a t a f o r b o t h s u r v e y s a r e on f i l e a t t h e U.B.C. d a t a l i b r a r y . A b r i e f d i s c u s s i o n o f the v a r i a b l e s i n c l u d e d i n each s u r v e y can be found i n Appendix B. A c r o s s - s e c t i o n a n a l y s i s f o r 19 75 u s i n g the R e t i r e m e n t Survey and i n c l u d i n g a v a r i a b l e m e asuring h e a l t h s t a t u s would, l o g i c a l l y , be t h e n e x t p i e c e o f r e s e a r c h stemming from t h i s s t u d y . B u r b i d g e and Robb (19 80) conducted a c r o s s - s e c t i o n a l a n a l y s i s based on d a t a from t h e P r e R e t i r e m e n t Survey, however, no one as y e t has u t i l i z e d t h e d a t a s e t a v a i l a b l e from the R e t i r e m e n t Survey t o c o n s t r u c t an e x p l a n a t o r y model o f t h e e l d e r l y ' s l a b o u r s u p p l y d e t e r m i n a n t s . When d a t a from t h e 1981 census becomes a v a i l a b l e a more c u r r e n t c r o s s - s e c t i o n a l a n a l y s i s , o r a t i m e - s e r i e s r e g r e s s i o n based on t h r e e y e a r s — 1 9 6 1 , 1971, and 1 9 8 1 — c o u l d be conducted. I t would be advantageous t o conduct a c r o s s - s e c t i o n a n a l y s i s w i t h d a t a f o r 1981 so a comparison w i t h the r e s u l t s o b t a i n e d i n t h i s s t u d y c o u l d be made. I n a d d i t i o n t o r e s e a r c h on t h e f a c t o r s i n f l u e n c i n g the e l d e r -9 4 l y ' s labour supply more quantitative research w i l l be needed investigating the economic and s o c i a l implications of an aging society. Research into the v i a b i l i t y of e x i s t i n g public pension programs and possible alternatives, as well as the costs of future health care programs for the e l d e r l y , are just two possible areas of future research. Increased understanding of the needs of the e l d e r l y and methods by which to meet these needs i s desirable at t h i s time. 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The F o r e i g n E x p e r i e n c e W i t h Income Maintenance f o r the E l d e r l y " ; H u l l : Economic C o u n c i l o f Canada, 1979 1 0 2 Glossary Variables In Regression Equation DEPENDENT VARIABLES LFP LFP can be defined as the labour force p a r t i c i p a t i o n rate for Canadian males and females 6 5 years of age and over by province. LFPg^ i s the eld e r l y ' s labour force p a r t i c i p a t i o n rate for the year 1 9 6 1 , while L F P 7 1 and LFPyg are the elder-l y ' s labour force p a r t i c i p a t i o n rate for 1 9 7 1 and 1 9 7 6 respect-i v e l y . LFPg^_^ 1 i s the difference i n the elderly's labour force p a r t i c i p a t i o n rate between 1 9 6 1 and 1 9 7 1 . INDEPENDENT VARIABLES RBE RBE i s the r a t i o of average yearly i n d i v i d u a l public pension benefits (comprising benefits received s t r i c t l y from the Old Age Security Program and the Guaranteed Income Supplement program) over t o t a l annual i n d i v i d u a l income of persons 6 5 and over as provided by Revenue Canada s t a t i s t i c s based on a l l returns by province and age. OCC OCC i s the r a t i o of those persons 6 5 years of age and over who are employed i n white-collar occupations (see Chapter 3 for a d e f i n i t i o n of white-collar occupations) over those persons 6 5 years of age and over who are employed i n blue-c o l l a r occupations (see Chapter 3 for a d e f i n i t i o n of blue-c o l l a r occupations) by province. UNE UNE i s the o v e r - a l l annual seasonally adjusted unemployment rate by province. URB URB i s the r a t i o of a l l persons l i v i n g i n urban areas as defined by S t a t i s t i c s Canada over a l l persons l i v i n g i n a l l other areas by province. FPR FPR i s the o v e r - a l l female labour force p a r t i c i p a t i o n rate by province. 103 Appendix A Raw Data PROVINCE (1961) LFP UNE URB FPR * RBE OCC NFLD. 9 .7 20 .1 50 .7 18 .4 20 .1 55 .9 P.E.I. 22 .4 7 .0 32 .4 24 .7 23 .9 29 .5 N.S. 16 .2 8 .1 54 .3 24 .5 21 .6 49 .9 N.B. 14 .9 10 .6 46 .5 24 .8 21 .9 50 .9 QUE. 16 .8 9 .1 74 .3 27 .9 20 .9 59 .1 ONT. 18 .5 5 .5 77 .3 32 .6 20 .7 57 .7 MAN. 18 .1 5 .2 63 .9 31 .5 23 .3 50 .1 SASK. 21 .2 4 .6 43 .0 26 .4 25 .1 31 .7 ALTA. 18 .6 4 .7 63 .3 30 .8 23 .4 42 .0 B.C. 12 .5 8 .3 72 .5 28 .3 22 .5 64 .9 PROVINCE (1971) NFLD. 8. .0 8 .4 58 .9 26 .2 45 .2 67 .8 P.E.I. 17 .7 10 .2 38 .9 38 .7 49 .0 47 .0 N.S. 13. .3 7 .0 58 .0 29 .2 42 .3 60 .3 N.B. 13 .1 6. .0 54 .5 34 .4 43 .3 64 .3 QUE. 14, .5 7 .3 79 .5 35 .0 37 .1 67 .6 ONT. 16. .1 5 .6 81 .8 44, .3 35, .7 62 .6 MAN. 16, .2 5 .7 70 .1 42, .3 43, .3 52 .2 SASK. 18, .5 3, .5 52, .7 39, .2 47, .9 34 .0 ALTA. 17. .0 5, .6 73, .6 44, .4 40 , .7 44 .9 B.C. 12, .4 7, .2 79, .7 40, .4 38, .7 66 .5 PROVINCE (1976) NFLD. 6. .5 13. .4 58. .8 31. .9 48. .3 P.E.I. 15. .8 9. .6 37. .0 43. ,9 41. .2 N.S. 10. .4 9. .5 55. .8 33. .6 43. .2 N.B. 10. ,1 11. .0 52. .3 38. ,6 44. ,7 QUE. 11. ,7 8. ,6 79. .1 41. ,2 39. ,8 N/A ONT. 12. ,5 6 . 2 81. .2 47. .8 45. ,3 MAN. 13. .6 4. ,7 69. ,9 46. ,2 53. ,5 SASK. 17. ,6 4. .0 55. ,5 46. ,4 35. ,2 ALTA. 15. ,7 3. ,9 75. ,0 50. ,0 35. ,5 B.C. 9. 3 8. 6 76. ,7 44. 9 43. 1 PROV. (61--71) NFLD. -1 . 7 -11. 7 8. 2 7. 8 25. 1 11. ,9 P.E.I. -4. 7 3. 2 6 . 5 14. 0 25. 1 17. ,5 N.S. -2 . 9 -1 . 1 3. 7 4 . 7 20. 7 10. 4 N.B. - 1 . 8 -4. 6 8. 0 9. 5 21. 4 13. 4 QUE. -2. 3 - 1 . 8 5. 2 7. 1 16. 2 8. 5 ONT. -2. 4 0. 1 4. 5 11. 7 15. 0 4. 9 MAN. -1 . 9 0. 5 6 . 2 10. 8 20. 0 2. 1 SASK. -2. 7 -1 . 1 9. 7 12 . 8 22 . 8 2. 3 ALTA. - 1 . 6 0. 9 10. 3 13. 6 17. 3 2. 9 B.C. -0. 1 - 1 . 1 7. 2 12. 1 16 . 2 1. 6 104 Appendix A ( c o n t i n u e d ) 19 61 RBE does n o t i n c l u d e C.P.P./Q•P•P•/ o r G.I.S. payments as thes e programs were n o n e x i s t a n t i n 1961. The O.A.S. program i n 1961 payed b e n e f i t s t o tho s e p e r s o n s 70 y e a r s o f age and o v e r . The age o f e l i g i b i l i t y f o r O.A.S. b e n e f i t s d e c l i n e d by one y e a r each y e a r b e t -ween 1966 and 1970 and remains a t 65. Appendix B V a r i a b l e s i n Retirement and Pre Retirement Surveys 105 -v 3671 M378 1975 Survey of r e t i r e m e n t . A l t e r n a t e t i t l e : D r o p - o f f s u r v e y on r e t i r e m e n t and p r e - r e t i r e m e n t c 1 r c u m s t a n c e s . Source of t i t l e : codebook A c c e s s : B - a l l u s e r s , d i s s e m i n a t e d by d i s t r i b u t o r . P r i n c i p a l I n v e s t i g a t o r : J1m M a r t i n , Canada. H e a l t h and We l f a r e Canada. P r o d u c e r : Canada. S t a t i s t i c s Canada. Labour D i v i s i o n , Ottawa, Ont. D i s t r i b u t o r : Canada. P u b l i c A r c h i v e s Canada. Machine Readable A r c h i v e s (GOO-00085 6. GOO-00086), Ottawa, Ont. Ge o g r a p h i c a r e a : Canada U n i v e r s e : a l l p e r s o n s 55 y e a r s of age and over who were e i t h e r s t i l l w o rking ( p r e - r e t 1 red) o r who had r e t i r e d a t the time of the I n t e r v i e w ( r e t i r e d ) . Sample frame: 1f the Labour F o r c e Survey respondent was 1n the r e l e v a n t age group and was r o t a t i n g out o f the LFS sample. Method of c o l l e c t i o n : s e i f - a d m 1 n 1 s t e r e d q u e s t i o n n a i r e Number of f11e s : 2 Type of d a t a : m i c r o Summary: The s u r v e y was co n d u c t e d 1n c o n j u n c t i o n w i t h the February 1975 monthly Labour F o r c e Survey. Documentat1 on: Doc t i t l e : M a r t i n , dim/ Survey of r e t i r e m e n t , p r e p a r e d by Winston A. Gomes. 2 v o l s . #1: Data codebook - Retirement survey d a t a s e t . #1: Data codebook - P r e - r e t i r e m e n t s u r v e y d a t a s e t . Ottawa. 0 n t . : P u b l 1 c A r c h i v e s of Canada, Machine Readable A r c h i v e s , 197G. (v111. 50 pp & v111, 49 pp. ) Doc n o t e s : & q u e s t i o n n a i r e s : R e t i r e d form ( E n g l i s h & French Iang, 14 pp.) and P r e - r e t 1 r e d form ( E n g l i s h & French language, 13 pp.) & R e g i o n a l o f f i c e p r o c e d u r e s manual (v11 pp.) Doc c a l l no.: AV14 3671 M378 1975 S u b t i t l e : R e t i r e m e n t s u r v e y . Catname: RETIRED.FINAL E d i t i o n : PAC/MRAD ed. U n i t o f o b s e r v a t i o n : I n d i v i d u a l Number of u n i t s : 1590 Number of c a r d s per u n i t : 1 L o g i c a l r e c o r d s : 1590 Number of v a r i a b l e s : 207 Format: c h a r a c t e r F i l e summary: V a r i a b l e s I n c l u d e : p r o v i n c e ; s u b - p r o v i n c i a l a r e a ; sex; m a r i t a l s t a t u s ; l a b o u r f o r c e s t a t u s ; age group; hours worked d u r i n g r e f e r e n c e week; d u r a t i o n of unemployment; l o o k i n g f o r f u l l - or p a r t - t i m e work; rea s o n f o r absence from work; 1961 o c c u p a t i o n a l c l a s s i f i c a t i o n ; 1971 o c c u p a t i o n a l c l a s s i f i c a t i o n ; I n d u s t r y code SIC; c l a s s of worker; p l a c e of b i r t h ; year Immigrated t o Canada; s t a t u s 1n Canada (Immigrant, landed, e t c . ) ; age a t which stopped f u l l - t i m e work; how change made; In what season r e t i r e d ; r e a s o n f o r r e t i r i n g ; p a r t i c i p a t i o n 1n program t o p r e p a r e f o r r e t i r e m e n t ; how soon a f t e r r e t i r e m e n t d i d R go on v a c a t i o n of one month o r more; p e r i o d of time spent w i t h l o n g e s t employer; age l e f t l o n g e s t employer; no. of j o b s s i n c e l e a v i n g l o n g e s t employer; what happened to o l d p o s i t i o n when R ix B (continued) r e t i r e d ; was r e t i r e m e n t age compulsory i n l a s t j o b ; member of c o l l e c t i v e b a r g a i n i n g group; t o t a l income the year b e f o r e r e t i r i n g ; has R moved because of r e t i r i n g , why; where l i v e d b e f o r e move; p r e f e r to r e t i r e a t d i f f e r e n t age, which; would R have r e t i r e d 5 y e a r s e a r l i e r g i v e n same s t a n d a r d of l i v i n g ; would R change working p a t t e r n s ; a p p r o v a l of compulsory r e t i r e m e n t age, which 1s b e s t age; what 1s b e s t way to r e t i r e ; h o u s e h o l d c o m p o s i t i o n ; main f i n a n c i a l s u p p o r t ; where R 1s l i v i n g now; d u r a t i o n of p r e s e n t r e s i d e n c e ; tenure; p r e f e r d i f f e r e n t l i v i n g arrangements; where would p r e f e r to l i v e ; p r e s e n t employement s t a t u t s ; main re a s o n f o r working or l o o k i n g f o r work; f r e q u e n c y of t e l e p h o n e c o n v e r s a t i o n s w i t h o t h e r s , s e e i n g f r i e n d s o r r e l a t i v e s , g o i n g shopping, watching t v , l i s t e n i n g to r a d i o , r e a d i n g , h o b b l e s , v i s i t community or drop-1n c e n t r e , go f o r d r i v e , e n t e r t a i n m e n t , p l a y c a r d s or bingo, see someone f o r medical c a r e , a t t e n t r e l i g i o u s s e r v i c e , work f o r pay or p r o f i t , do v o l u n t e e r work, go f o r walk, d a n c i n g , bowl. Jog, swim, t r a v e l o v e r n i g h t ; s a t i s f a c t i o n w i t h l i f e now; Income from p e n s i o n s and a n n u i t i e s . Investments, work, o t h e r government payments, a l l s o u r c e s i n 1974; R's t o t a l Income, spouse's t o t a l income (1974); r e c e i p t of p e n s i o n from work, Canada/Quebec p e n s i o n , o l d age s e c u r i t y , p r i v a t e p e n s i o n ; i s work p e n s i o n a d j u s t e d a u t o m a t i c a l l y t o c o s t of l i v i n g , d i t t o Canada/Quebec p e n s i o n , o l d age s e c u r i t y , p r i v a t e p e n s i o n ; knowledge of Canada/Quebec p e n s i o n , g u a r a n t e e d Income supplement, L o c a l I n i t i a t i v e s P r o j e c t , New H o r i z e n s P r o j e c t , o l d age s e c u r i t y p e n s i o n , O p p o r t u n i t i e s f o r Youth, Unemployment Insurance; does R b e n e f i t from above s o u r c e s ; how Important to R i s neighbourhood, kee p i n g 1n touch w i t h f a m i l y , f r i e n d s , former workmates, h a v i n g s p e c i a l I n t e r e s t o r hobby, making new f r i e n d s , o t h e r ; how adequate 1s Income, d i e t , c l o t h i n g , h o u s i n g , p h y s i c a l h e a l t h , emotional h e a l t h , knowledge of where to get h e l p , o t h e r t h i n g s ; o p p o r t u n i t y t o do t h i n g s important t o R; a s p e c t s of l i f e now t h a t a r e b e t t e r than e x p e c t e d , worse than expected; comparison w i t h o t h e r r e t i r e d p e r s o n s ; d e r i v e d measures. Date c o l l e c t e d : Feb. 1975 Date f i l e w r i t t e n : May 16, 1980 S u b t i t l e : P r e - r e t i r e m e n t s u r v e y . Catname: PRERET.FINAL E d i t i o n : PAC/MRAD ed. U n i t of o b s e r v a t i o n : I n d i v i d u a l Number of u n i t s : 828 Number of c a r d s per u n i t : 1 L o g i c a l r e c o r d s : 828 Number of v a r i a b l e s : 200 Format: c h a r a c t e r F i l e summary: V a r i a b l e s I n c l u d e : p r o v i n c e ; r u r a l / u r b a n ; sex; m a r i t a l s t a t u s ; l a b o u r f o r c e s t a t u s ; age group; r e f e r e n c e week hours worked, l o o k i n g f o r f u l l - p a r t - t i m e work, rea s o n f o r absence from work; 1961, 1971 o c c u p a t i o n a l c l a s s i f i c a t i o n ; I n d u s t r y code; c l a s s of worker; p l a c e of b i r t h ; date of Immigration t o Canada; l e g a l s t a t u s 1n Canada; year o b t a i n e d landed immigrant s t a t u s ; worked f u l l - t i m e s i n c e age of 45; 1s R working a t p r e s e n t ; compulsory r e t i r e m e n t age; member of c o l l e c t i v e b a r g a i n i n g group; l o n g e s t time w i t h one employer; a t what age l e f t l o n g e s t employer; f u l l - t i m e j o b s a f t e r l e a v i n g l o n g e s t employer; no. f u l l - t i m e j o b s ; a p p r o v a l of compulsory r e t i r e m e n t age; p r e f e r r e d compulsory r e t i r e m e n t age; b e s t way f o r p e o p l e to r e t i r e ; how would R change work p a t t e r n ; p r e s e n t ix B (continued) r e s i d e n c e ; t o t a l Income 1974 from a l l s o u r c e s ; age at which R e x p e c t s to r e t i r e ; r e a s o n f o r r e t i r i n g ; age at which R would p r e f e r t o r e t i r e , why; p a r t i c i p a t i o n 1n program to p r e p a r e f o r r e t i r e m e n t , c o n t e n t s of program; e x p e c t e d household c o m p o s i t i o n when r e t i r e d ; w i l l spouse be working f u l l - t i m e or p a r t - t i m e ; e x p e c t e d r e s i d e n c e t e n u r e p o s t - r e t i r e m e n t ; e x p e c t e d p o s t - r e t i r e m e n t p l a c e of r e s i d e n c e ; main f i n a n c i a l s u p p o r t ; e x p e c t e d p o s t - r e t i r e m e n t c o n t a c t w i t h o t h e r s , f r i e n d s , r e l a t i v e s , g o i n g shopping, watching t v l i s t e n i n g to r a d i o , r e a d i n g , time on h o b b l e s , v i s i t community or drop-1n c e n t r e s , go f o r d r i v e , f o r e n t e r t a i n m e n t , p l a y bingo or c a r d s , medical c a r e , a t t e n d r e l i g i o u s s e r v i c e , work f o r pay or p r o f i t , do v o l u n t e e r work, go f o r walk, d a n c i n g , bowl, j o g , swim, t r a v e l o v e r n i g h t ; e x p e c t e d s a t i s f a c t i o n w i t h r e t i r e m e n t ; reasons f o r f e e l i n g t h i s way; knowledge of Canada/Quebec p e n s i o n p l a n , guaranteed Income supplement, L o c a l I n i t i a t i v e s P r o j e c t , New H o r i z o n s P r o j e c t , O l d age s e c u r i t y p e n s i o n ; O p p o r t u n i t i e s f o r Youth, unemployment Insurance; e x p e c t e d b e n e f i t s from these s o u r c e s ; r e q u i r e d t o t a l monthly Income f o r s a t i s f y i n g r e t i r e m e n t ; g i v e n chance to r e t i r e e a r l y w i t h adequate p e n s i o n , what would R do; minimum monthly p e n s i o n to p e r m i t R t o r e t i r e e a r l y ; Income ex p e c t e d from p e n s i o n s and a n n u i t i e s 1n f i r s t y e a r of r e t i r e m e n t , from Investments, from work, from o t h e r government payments, t o t a l from a l l s o u r c e s , own Income vs spouse's; p e n s i o n p l a n through employment, p r i v a t e ; e x p e c t e d p e n s i o n r e c e i p t s ; p e n s i o n s a d j u s t e d to c o s t of l i v i n g ; e x p e c t a t i o n of working a f t e r r e t i r e m e n t , why; Importance of neighbourhood, f a m i l y , f r i e n d s , workmates, d e e l o p l n g hobby, new f r i e n d s ; adequacy of Income, d i e t , c l o t h i n g , h o u s i n g , p h y s i c a l h e a l t h , emotional h e a l t h , knowledge of where to get h e l p ; e x p e c t a t i o n of o p p o r t u n i t i e s to see f r i e n d s , e t c . ; g e n e r a l e x p e c t a t i o n of r e t i r e m e n t ; p r e f e r r e d l i v i n g s i t u a t i o n when f i r s t r e t i r e d , why; d e r i v e d measures. Date c o l l e c t e d : Feb. 1975 Date f i l e w r i t t e n : May 16, 1980 E n t r y d a t e : June 24, 1980 108 Appendix C S e l e c t e d Models Used by R e s e a r c h e r s o f the E l d e r l y ' s Labour S u p p l y (1) R e s e a r c h e r : Methodology: Data Source: Dependent V a r i a b l e : Gordon, M a r g a r e t . (1963b) C r o s s S e c t i o n A n a l y s i s U t i l i z e d d a t a from t h e I n t e r n a t i o n a l Labour O f f i c e ; U n i t e d N a t i o n s ; U.S. Department o f H e a l t h , E d u c a t i o n and W e l f a r e ; and t h e U n i t e d N a t i o n s Department o f Economics and S o c i a l A f f a i r e s f o r t h e y e a r 1950. C o u n t r i e s i n t h e model i n c l u d e d A u s t r a l i a , A u s t r i a , B e l g i u m , Canada, Denmark, F i n l a n d , F r a n c e , West Germany, I t a l y , Luxembourg, N e t h e r l a n d s , New Z e a l a n d , Norway, S p a i n , Sweden, S w i t z e r l a n d , U n i t e d Kingdom, and t h e U n i t e d S t a t e s Labour f o r c e p a r t i c i p a t i o n r a t e o f persons 65 and o v e r Independent V a r i a b l e : R a t i o o f average Old-Age b e n e f i t s t o average a n n u a l e a r n i n g s (2) R e s e a r c h e r : Methodology: Data Source: Dependent V a r i a b l e s : Independent V a r i a b l e s : Pechman e t a l . (1968) C r o s s S e c t i o n A n a l y s i s U t i l i z e d d a t a from t h e I n t e r n a t i o n a l Labour O f f i c e ; U n i t e d N a t i o n s ; U.S. Department o f H e a l t h , E d u c a t i o n and W e l f a r e ; and the U n i t e d N a t i o n s Department o f Economics and S o c i a l A f f a i r e s f o r t h e y e a r 1960. C o u n t r i e s i n t h e model i n c l u d e d A u s t r a l i a , A u s t r i a , B e l g i u m , Canada, Denmark, F i n l a n d , F r a n c e , West Germany, I c e l a n d , Japan, N e t h e r l a n d s , New Z e a l a n d , Norway, P o r t u g a l , S p a i n , Sweden, S w i t z e r l a n d , U n i t e d Kingdom, and t h e U n i t e d S t a t e s (1) Labour f o r c e p a r t i c i p a t i o n r a t e o f t h e t o t a l p o p u l a t i o n 65 and o v e r (2) Labour f o r c e p a r t i c i p a t i o n r a t e o f the male p o p u l a t i o n 65 and o v e r (1) P e r C a p i t a income 109 Appendix C (c o n t i n u e d ) (2) p o p u l a t i o n o v e r s o c i a l s e c u r i t y r e t i r e m e n t age as a pe r c e n t a g e o f t h e t o t a l p o p u l a t i o n (3) Average s o c i a l s e c u r i t y b e n e f i t s as a per c e n t a g e o f average e a r n i n g s i n m a n u f a c t u r i n g (3) R e s e a r c h e r : Methodology: Data Source: Dependent V a r i a b l e s : Independent V a r i a b l e s : Bowen and F i n e g a n . (1969) C r o s s S e c t i o n A n a l y s i s The l / 1 0 0 0 t n sample o f t h e 1960 U n i t e d S t a t e s census. Labour f o r c e p a r t i c i p a t i o n r a t e o f (1) Males 55-64 (2) Males 65-74 (3) S i n g l e Women 55-64 (4) S i n g l e Women 65-74 (5) M a r r i e d Women 55-64 (6) M a r r i e d Women 65-74 (1) Age (2) M a r i t a l S t a t u s (3) C o l o r (4) F a m i l y R e s p o n s i b i l i t i e s and Housing (5) S c h o o l i n g (6) H e a l t h ( f o r o l d e r males o n l y ) (7) Other Income ( o t h e r f a m i l y income f o r m a r r i e d women) (8) Employment S t a t u s o f Husband ( f o r m a r r i e d women) (9) O c c u p a t i o n (4) R e s e a r c h e r : Methodology: Data Source: B o s k i n , M i c h a e l . (1977) Time S e r i e s A n a l y s i s U t i l i z e d d a t a from the P a n e l Study o f Income Dynamics, a U n i t e d S t a t e s N a t i o n a l Sample o f 5,000 h o u s e h o l d s . E x t r a c t e d a sample o f 131 house h o l d s between 1968 and 1972 Dependent V a r i a b l e : Independent V a r i a b l e s : R e t i r e d p e r s o n s as d e f i n e d i n t h e P a n e l Study (1) S o c i a l S e c u r i t y B e n e f i t s (2) Income f o r A s s e t s 110 Appendix C ( c o n t i n u e d ) (3) Net E a r n i n g s (4) Age (5) E d u c a t i o n (6) Spouses' E a r n i n g s (7) Hours 111 (5) R e s e a r c h e r : Quinn, J o s e p h . (1977a) Methodology: C r o s s S e c t i o n A n a l y s i s Data Source: U t i l i z e d d a t a from t h e 10 y e a r R e t i r e m e n t H i s t -o r y Study o f 11,000 men and non - m a r r i e d women aged 58-63. E x t r a c t e d a sample o f 4,354 o f w h i t e m a r r i e d men f o r 196 9 Dependent V a r i a b l e s : Independent V a r i a b l e s : (1) Labour f o r c e s t a t u s (1 (2 (3 (4 (5 (6 (7 (8 (9 (10 H e a l t h L i m i t a t i o n E l i g i b i l i t y f o r S o c i a l S e c u r i t y E l i g i b i l i t y f o r o t h e r P e n s i o n E l i g i b i l i t y f o r Both Dependents Wage r a t e A s s e t Income Unemployment Rate P e r c e n t Change i n Employment Job C h a r a c t e r i s t i c s (6) R e s e a r c h e r : Methodology: Data Source: Dependent V a r i a b l e s : Independent V a r i a b l e s : B u r b i d g e and Robb. (19 80) C r o s s S e c t i o n A n a l y s i s Pre R e t i r e m e n t Survey o f i n d i v i d u a l s o v e r 55 and n o t y e t r e t i r e d , conducted i n F e b r u a r y 1975. E x t r a c t e d a sample o f 257 Ex p e c t e d R e t i r e m e n t Age o f (1) Males 55-64 (2) Males 55-59 (3) Males 60-64 (1) E x p e c t e d P e n s i o n Income (2) Income E x p e c t e d from o t h e r Sources (3) 1974 Income Appendix C (continued) ( 4 ) Spouses' Income (5) Inadequate H e a l t h (6) C o m p u l s o r a r i l y R e t i r e d ( 7 ) Expected t o L i v e w i t h Othe (8) Not i n Labour Force (9) Occupation (10) Age 

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