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2021 | OriginalPaper | Chapter

8. Basic Income in Canada in the Twenty-First Century (the 00s and 10s)

Author : Prof. Wayne Simpson

Published in: Is Basic Income Within Reach?

Publisher: Springer International Publishing

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Abstract

Canada’s poverty rate began a steady descent in 2000 despite slower economic growth, although concerns about precarious employment grew. New research from Dauphin suggested health and education benefits from a negative income tax as well as social interaction effects on labour force participation. Successive policy initiatives under the National Child Benefit culminated in the Canada Child Benefit to support lower-income families. A basic income pilot project in Ontario was discontinued without yielding any results, while promising microsimulation research on the impacts of a basic income emerged. The Poverty Reduction Act was passed to declare the Market Basket Measure as the official poverty measure, establish a national advisory council and set ambitious poverty targets that will require a more comprehensive approach to income support along the lines of a basic income.

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Footnotes
1
Online at https://​www150.​statcan.​gc.​ca/​n1/​pub/​75f0002m/​2013002/​mbm-mpc-eng.​htm. The MBM has been refined in a number of respects and is now produced for 50 different regions, including 19 specific urban communities.
 
3
The May, 2019 rate was the lowest recorded in the modern era of labour force data collection that dates to 1976. The 2020 COVID-19 pandemic has resulted in widespread job loss and a dramatic increase in the unemployment rate, but it would not be linked to technological change.
 
4
The precarious nature of work for low skill workers in areas like personal services now seems clear from the impact of the COVID-19 pandemic, where these jobs were easily shed by employers as demand for their services shifted abruptly. Other more protected employment at higher skill levels was often saved by shifting to remote work from home.
 
5
Indeed, many twenty-first-century references to Mincome appear to associate the experiment strictly with Dauphin, although the primary focus of the experiment was the Winnipeg dispersed sample.
 
6
This was the leap that designers of the income maintenance experiments in the U.S. were not prepared to make, leading to a dispersed sample design for the purpose of assessing labour supply response.
 
7
Forget considered possible impacts on fertility, birth weight and family dissolution but found no evidence of a Mincome effect. The family dissolution effect was consistent with results for the Winnipeg dispersed sample discussed in Sect. 7.​1 of Chapter 7.
 
8
Forget (2018) discusses the experiments, the Dauphin experience, and her findings in a very engaging and accessible manner to argue for a basic income as the basis for a “healthier, happier, more secure life for all.”
 
10
This is the eligibility requirement to receive the long-standing non-refundable disability tax credit. Any child eligible to receive the disability tax credit and the CCB would automatically receive the Child Disability Benefit.
 
11
Legislation to institute automatic annual indexation of the CCB and Child Disability Benefit starting in July 2020 received Royal Assent.
 
12
The three northern Canadian territories are delegated powers by the federal government unlike the provinces, whose powers are largely governed by the Constitution Act.
 
13
Yukon had a population of 35,000 in 2010; Dauphin and its surrounding rural municipality had a population of about 10,000 during Mincome.
 
14
As Fig. 8.2 indicates, the LIM represents a higher poverty standard than the LICO or the MBM so that the OBIP income guarantees would constitute a higher proportion of those poverty standards.
 
15
If anecdotal evidence is to be believed, there were significant problems with enrolment in OBIP and efforts to boost enrolment compromised random allocation.
 
16
The Hamilton sample included the surrounding areas of Brantford and Brandt County.
 
17
We did not investigate alternatives that would make the refundable tax credits free of tax, as is now the case with the Canada Child Benefit.
 
18
The details for these calculations are in the Appendix to Stevens and Simpson (2017). The calculations are converted from hours to earnings in a straightforward way because SPSD/M is based on tax information that includes earnings but not hours worked.
 
19
We elaborate on what federal-provincial negotiations and arrangements might look like in Chapter 9, Sect. 9.​2.
 
20
Some single individuals would be students or workers in training who would be expected to leave poverty over time. We have cited only the national results; the results will vary somewhat by province as indicated in Stevens and Simpson (2017, Tables 13 and 14).
 
21
The Liberals did introduce a middle-class tax cut along with the Canada Child Benefit in their 2016 budget, but it was a modest $3 billion.
 
22
Thus, a two-parent family of four with one preschooler would receive an income guarantee of 2 times $20,000 plus $6400 plus $5400 (from Table 8.1) or $40,084, which would exceed the after-tax LICO of $39,092 for a family of four in 2016. The BIG benefit would decline by 30 cents on the dollar for the adult portion of the guarantee ($28,284) but only by 13.5 cents on the dollar for the child portion ($11,800), as in Table 8.1. Family earnings would reduce the BIG benefit by 30% up to $30,000 and 43.5% thereafter (up to $65,000).
 
23
Koebel and Pohler use the MBM(2008) measure of poverty rather than the LICO, which may affect the comparison with the other studies. The Koebel and Pohler study also uses 2018 as its reference point, when the poverty rate was lower than in 2015, as in Fig. 8.2.
 
24
Boadway et al. (2018a) do not provide comparable figures. Koebel and Pohler (2019) do not provide estimates of labour supply response to compare with Boadway et al. and Stevens and Simpson, but my assumption is that they would be somewhat reduced along with marginal effective tax rates.
 
25
Another microsimulation study in the debate would be that produced by the Office of the Parliamentary Budget Officer (2018), but it did not allow for labour supply or other behavioural response.
 
28
It would have been useful to distinguish between persons 18–64 in families with and without children, but this data is not readily available from Statistics Canada.
 
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Metadata
Title
Basic Income in Canada in the Twenty-First Century (the 00s and 10s)
Author
Prof. Wayne Simpson
Copyright Year
2021
DOI
https://doi.org/10.1007/978-3-030-66085-7_8