Public Pensions and Retirement: International Evidence in the Canadian Context Kevin Milligan ~ Vancouver School of Economics ~ University of British Columbia

Public Pensions and Retirement: International Evidence in the Canadian Context

with Tammy Schirle.
Skills Research Initiative Working Paper Number 2006-A13, 2006.
Google Scholar entry.


This paper examines evidence on the impact of Canada's public pensions on the retirement decisions of the elderly. Public pensions may affect a person's labour market decisions in one of two ways. First, a wealth effect exists when public pensions increase a person's total lifetime income, inducing the person to spend fewer years in the labour market and retire at an earlier age. Second, an accrual effect may exist if the discounted present value of future pension flows depends on the date of retirement. If so, then the rate of accrual of rights to future pension income may affect the timing of retirement. Through descriptions and simulations, we document the components of Canada's income security system and show how they act independently and in concert to change the incentives to retire.

The major contributing factors are:

To best place the importance of labour market disincentives on actual retirement behaviour in context, the paper provides a thorough survey and critical review of the international evidence on public pensions and retirement. Through nearly thirty years of research across many countries and dozens of studies, the broad weight of the evidence suggests that the structure of public pensions contributes to the decision to retire. These findings are corroborated in studies of the retirement behaviour of Canadians.

The paper concludes with three major findings:


Published Version, 2006: [no longer available online]

Final draft, June 2005: PDF.

Return to Research Page. ~ Home Page ~ Vancouver School of Economics ~ UBC