Labour market impact of a work earnings exemption on benefits for low‑income seniors / Edouard Imbeau.: Em12-68/2020E-PDF

"In 2008, the Canadian government significantly increased the work earnings exemption on benefits for low-income seniors (Guaranteed Income Supplement and Allowances). The new policy allows seniors to earn up to $3500 without having their benefits reduced. This paper examines the impact of this policy change on labour market outcomes, using T1 tax data. The study uses a control group in a difference-in-difference framework to take into account the increase in labour market participation of all seniors during this period. Results show the policy increased employment rates by one percentage point among 60-64 year old recipients. Among 60-64 year old recipients who worked for an employer, the policy increased work earnings by 15%. Results for older seniors were not as conclusive, but suggested similar increases in work earnings among those who worked. These results are significant given the relatively small policy change involved"--Abstract, page 2.

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