lynx   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/lis/liswps/271.html
   My bibliography  Save this paper

Transfers Matter Most

Author

Listed:
  • Daniyal Zuberi
Abstract
Three decades ago, Canada and the United States shared almost identical relative poverty and inequality levels. Yet despite experiencing similar macro-level social and economic transformations from 1974 to 1994 , the two nations have experienced diametrically opposite trends in relative household poverty. While levels of poverty increased in the U.S. during this period, Canada has experienced declining household poverty. Several institutional economists have utilized the comparative case of Canada to emphasize the important role of one kind of institution for explaining differences in poverty or inequality rates at one point in time i . These economists have presented compelling evidence that institutional differences, and not broader cultural or economic differences, explain the poverty and inequality differences between Canada and the U.S. in the late 1980s. These institutional differences include unionization policy and social welfare packages. Yet despite the importance of these institutional differences for explaining differences in poverty or inequality levels at one point in time, my analysis of Luxembourg Income Survey (LIS) data on Canada and the U.S. over this period clearly demonstrates that it is the different ways each nation has reformed their transfer systems over this period, and not other institutional differences or reforms, that comprehensively explain the divergent trends in relative household poverty rates from 1974 to 1994. My analysis utilizes harmonized LIS data to identify the relative explanatory strength of different facets of the transfer systems for explaining the divergence in poverty from 1974-1994. Surprisingly, the breakdown analysis reveals that the divergent trends can largely be explained by differences in the structure and reform of each nations Social Retirement benefits, a factor not mentioned as an explanatory factor in the previous literature. Differences in other Social Insurance transfers and ""Means-Tested"" benefits together also helped explain the divergence in poverty trends, but with less power than expected. The increased effectiveness of the Canadian transfers for reducing its relative household poverty rate compared to the American system over this period has consequences for explaining divergence in inequality and possibly health outcomes and other measures of well-being between these two nations.

Suggested Citation

  • Daniyal Zuberi, 2001. "Transfers Matter Most," LIS Working papers 271, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:271
    as

    Download full text from publisher

    File URL: http://www.lisdatacenter.org/wps/liswps/271.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. -, 1997. "Economic survey of Canada, 1996," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 28967, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. John Myles & Paul Pierson, "undated". "Friedman's Revenge: The Reform of "Liberal" Welfare States In Canada and the United States," Canadian International Labour Network Working Papers 06, McMaster University.
    3. Rebecca M. Blank & Maria J. Hanratty, 1993. "Responding to Need: A Comparison of Social Safety Nets in Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 191-232, National Bureau of Economic Research, Inc.
    4. -, 1997. "Economic survey of United States, 1996," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 28969, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Richard B. Freeman & Karen Needels, 1993. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 45-68, National Bureau of Economic Research, Inc.
    6. Lars Osberg, 2000. "Poverty in Canada and the USA: Measurement, Trends and Implications," LIS Working papers 236, LIS Cross-National Data Center in Luxembourg.
    7. David Card & Richard B. Freeman, 1993. "Introduction to "Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States"," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 1-20, National Bureau of Economic Research, Inc.
    8. David Card & W. Craig Riddell, 1992. "A Comparative Analysis of Unemployment in Canada and the United States," Working Papers 677, Princeton University, Department of Economics, Industrial Relations Section..
    9. David Card & Richard B. Freeman, 1993. "Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States," NBER Books, National Bureau of Economic Research, Inc, number card93-1, June.
    10. Thomas Lemieux, 1993. "Unions and Wage Inequality in Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 69-108, National Bureau of Economic Research, Inc.
    11. Card, David & Freeman, Richard B. (ed.), 1993. "Small Differences That Matter," National Bureau of Economic Research Books, University of Chicago Press, number 9780226092836, Febrero.
    12. David Card & W. Craig Riddell, 1993. "A Comparative Analysis of Unemployment in Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 149-190, National Bureau of Economic Research, Inc.
    13. Katherin Ross Phillips & Timothy Smeeding, 1999. "Social Protection for the Poor in the Developed World: The Evidence from LIS," LIS Working papers 204, LIS Cross-National Data Center in Luxembourg.
    14. McKinley L. Blackburn & David E. Bloom, 1993. "The Distribution of Family Income: Measuring and Explaining Changes in the 1980s for Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 233-266, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Siddiqi, Arjumand & Hertzman, Clyde, 2007. "Towards an epidemiological understanding of the effects of long-term institutional changes on population health: A case study of Canada versus the USA," Social Science & Medicine, Elsevier, vol. 64(3), pages 589-603, February.
    2. James Williamson & Timothy Smeeding, 2004. "Sliding into Poverty? Cross-National Patterns of Income Source Change and Income Decay in Old Age," LIS Working papers 388, LIS Cross-National Data Center in Luxembourg.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John F. Helliwell, 2001. "Canada: Life beyond the Looking Glass," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 107-124, Winter.
    2. Peter Kuhn, "undated". "Canada and the "OECD Hypothesis": Does Labour Market Inflexibility Explain Canada's High Level of Unemployment?," Canadian International Labour Network Working Papers 10, McMaster University.
    3. David Card & Thomas Lemieux, 1997. "Adapting to Circumstances: The Evolution of Work, School, and Living Arrangements Among North American Youth," Working Papers 765, Princeton University, Department of Economics, Industrial Relations Section..
    4. Florian Hoffmann & Thomas Lemieux, 2016. "Unemployment in the Great Recession: A Comparison of Germany, Canada, and the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 95-139.
    5. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August.
    6. David Card & Thomas Lemieux, 2000. "Adapting to Circumstances (The Evolution of Work, School,and Living Arrangements among North American Youth)," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 171-214, National Bureau of Economic Research, Inc.
    7. Kory Kroft & Fabian Lange & Matthew J. Notowidigdo & Lawrence F. Katz, 2016. "Long-Term Unemployment and the Great Recession: The Role of Composition, Duration Dependence, and Nonparticipation," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 7-54.
    8. Peter Kuhn (McMaster), "undated". "Labour Market Polarization: Canada in International Perspective," Canadian International Labour Network Working Papers 02, McMaster University.
    9. David Albouy & Alex Chernoff & Chandler Lutz & Casey Warman, 2019. "Local Labor Markets in Canada and the United States," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 533-594.
    10. Picot, Garnett & Heisz, Andrew & Jackson, Andrew, 2002. "Winners and Losers in the Labour Market of the 1990s," Analytical Studies Branch Research Paper Series 2002184e, Statistics Canada, Analytical Studies Branch.
    11. David Gray & Gilles Grenier, 1998. "Jobless Durations of Displaced Workers: A Comparison of Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 152-169, February.
    12. John Dinardo & Thomas Lemieux, 1997. "Diverging Male Wage Inequality in the United States and Ganada, 1981–1988: Do Institutions Explain the Difference?," ILR Review, Cornell University, ILR School, vol. 50(4), pages 629-651, July.
    13. James Ted McDonald & Christopher Worswick, 1999. "Wages, Implicit Contracts, and the Business Cycle: Evidence from Canadian Micro Data," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 884-913, August.
    14. Pavel Gertler, 2010. "The wage curve: A panel data view of labour market segments," Working and Discussion Papers WP 3/2010, Research Department, National Bank of Slovakia.
    15. Sharpe, Andrew & Zyblock, Myles, 1997. "Macroeconomic performance and income distribution in Canada," The North American Journal of Economics and Finance, Elsevier, vol. 8(2), pages 167-199.
    16. MacLeod, W Bentley, 2016. "Human capital: Linking behavior to rational choice via dual process theory," Labour Economics, Elsevier, vol. 41(C), pages 20-31.
    17. Stephen S. Poloz, 1995. "The Causes of Unemployment in Canada: A Review of the Evidence," Macroeconomics 9502002, University Library of Munich, Germany.
    18. Gary Burtless, 1998. "Relative Unemployment in Canada and the United States: An Assessment," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 254-263, February.
    19. David A. Green & Benjamin M. Sand, 2015. "Has the Canadian labour market polarized?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 612-646, May.
    20. Eswar Prasad & Alun Thomas, 1998. "Labour Market Adjustment in Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 121-137, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lis:liswps:271. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Piotr Paradowski (email available below). General contact details of provider: https://edirc.repec.org/data/lisprlu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.
    Лучший частный хостинг