Dramatic Decline in Welfare Dependency in Canada, Several Factors Responsible: C.D. Howe Institute

    TORONTO, June 19 /CNW/ - Canada has experienced a dramatic decline in
welfare dependency since the early 1990s, according to a new study by the C.D.
Howe Institute, which notes the total number of Canadians dependent on Social
Assistance (SA) - or "welfare" to many - fell by approximately half from the
early 1990s to 2005, taking the country's rising population into account. In
The Welfare Enigma: Explaining the Dramatic Decline in Canadians' Use of
Social Assistance, 1993-2005, authors Ross Finnie and Ian Irvine provide a
nationwide analysis of the factors responsible for the truly remarkable
decline, and draw implications for policymakers.
    The authors follow a large nationwide sample of taxfilers to examine
annual welfare participation rates along with the underlying entry and exit
rates for individuals in different kinds of households (unattached
individuals, couples with and without children, and single parents). They
identify the impacts of a variety of factors on SA outcomes. These factors
include economic conditions (as captured by the unemployment rate), SA benefit
levels, the generosity of the Employment Insurance system, and, lastly, other
factors such as changes in eligibility rules or procedures that took place in
specific years. They then assess the contribution of each of these factors to
the decline in welfare dependence. They find that all these factors played a
    In broader policy terms the authors draw two main conclusions. First, the
notion that individuals on SA simply do not want to - and will not - work is
demonstrably untrue. The most significant influence on SA rates appears to be
the availability of jobs, and it was the substantial strengthening of the
economy after 1996 (falling unemployment) that had the greatest effect in
driving SA rates downwards over the period of their study.
    Second, the perspective that SA benefit rates have no effect on SA
participation rates, and that cutting benefits will only punish those who have
no choice but to be on SA also appears incorrect. More generous SA benefit
rates appear to attract more individuals onto SA, and more generous EI
benefits may actually have a similar effect.

    For the communiqué, go to

    For the study, go to www.cdhowe.org/pdf/commentary_267.pdf.

    For the Supplementary Data Appendix, go to

For further information:

For further information: Ross Finnie, Associate Professor, Graduate
School of Public and International Affairs, University of Ottawa, (613)
295-5798, Email: Ross.Finnie@uOttawa.ca; Ben Dachis, Policy Analyst, C.D. Howe
Institute, (416) 865-1904, Email: cdhowe@cdhowe.org

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