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UBC Theses and Dissertations

The growth of social assistance receipt in Canada Stark, Alan A.

Abstract

The research undertaken in this thesis examines social assistance (welfare) receipt in Canada during the 1981-95 period to determine the forces responsible for the dramatic growth in welfare use observed during the 1990s. The influence of changes in welfare benefits, labour market conditions, and the availability of unemployment insurance on welfare use during this period is examined using two distinct, but complementary approaches. The first approach investigates this issue from an aggregate standpoint, using Survey of Consumer Finances micro data to construct welfare usage rates for employable singles without children (male and female) and lone mothers. Separate analyses are performed for each of these sub-groups using aggregate province level data. The second approach attacks the issue from a microeconomic standpoint, employing duration analysis to examine the path leading individuals from employment to welfare receipt. Using the 1988-90 longitudinal file of the Labour Market Activity Survey, semi-parametric duration models are estimated to determine how the job loss, reemployment and welfare take-up processes are affected by incentives in welfare benefits, labour market conditions, availability of unemployment insurance as well as demographic variables. The estimates from the duration analysis are applied to administrative data on inflows of persons into the pool of non-employed to simulate and decompose rates of welfare incidence over the 1984-95 period. Results from these two approaches present a relatively consistent picture of welfare use in Canada during the 1990s. Both approaches find strong evidence of important labour market effects. Thus, the economic downturn of the early 1990s played a significant role in the growth of welfare use during this period, particularly in Ontario and Quebec. The evidence concerning the importance of interactions with the unemployment insurance system and changes in benefit generosity is mixed. Both UI effects and benefit effects are found to be important determinants of welfare use but only among specific types of families. The simulation results indicate these factors can account for only a minor amount of the variation in predicted welfare incidence in the 1990s.

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