Abstract
Fortuitous political events led to revival of Mincome under the Institute for Economic Research at the University of Manitoba. Analysis of the Winnipeg dispersed sample indicated very modest labour supply response to a negative income tax in line with U.S. results, awareness by those treated of the broad program features, and no evidence of marital instability. Despite extended periods of strong growth toward the end of the twentieth century, poverty persisted amidst growing income inequality but without the occupational polarization evident in the U.S. and Europe. The Macdonald Commission proposal for a Universal Income Security Plan, introduction of a universal refundable sales tax credit and creation of the National Child Benefit Initiative all represented potentially influential steps toward a basic income in Canada.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
This section relies heavily on Simpson et al. (2017) and particularly on Greg Mason’s portion of the paper that reports on the aftermath of Mincome. A colleague in the Department of Economics at the University of Manitoba, Greg became director of the Institute for Social and Economic Research and provides an invaluable source of information about the Institute’s work in developing the Mincome data.
- 2.
In statistical or econometric terms, estimation that would yield the true value of the work disincentive effect of a NIT if sufficient observations were collected. In practice, the limitations of sample size would result in some degree of deviation from the true value (sampling error) even if there were no other complications arising from the experiment (such as non-random assignment, attrition and non-participation).
- 3.
These control variables were advocated for the analysis of the U.S. experiments (Keeley and Robins 1978; Robins and West 1982) because the Conlisk-Watts assignment model and participation in the experiment both depend on family income and prospective payments, which in turn depend on labour supply and introduce the potential for bias in the absence of the controls. Other socioeconomic and demographic variables associated with labour supply behaviour might also be included but, insofar as they were either uncorrelated with the treatment variables by experimental assignment or fixed in time, they would be expected to have no effect on the estimates of the effects of Mincome on hours worked.
- 4.
See Table 3.3 for a comparison with the U.S. results. The estimates of the work distinctive effects were statistically insignificant when time effects were included in the model.
- 5.
There is also the question of how income support under Manitoba and U.S. state welfare programs compared at the time, since that would be the basis for comparison with those who were welfare recipients in the respective control groups and treated families before treatment.
- 6.
In other words, a comparable study confined to Dauphin that included community effects on program learning might have yielded different results with superior understanding of the NIT benefits system.
- 7.
The LICO-AT, as opposed to the LICO before tax, is most appropriate because a poverty standard refers to the disposable income available for spending on basic needs. See also Sect. 6.1 for discussion of the LICO.
- 8.
The declining retirement age of men might reflect some job displacement late in life but is generally attributed to rising incomes and pension benefits that allow earlier retirement. The employment rate is estimated from historical Labour Force Survey figures at https://www150.statcan.gc.ca/n1/pub/75-005-m/75-005-m2016001-eng.htm.
- 9.
We is appropriate here, as much of the work of classifying the occupations and developing the evidence was conducted by my student research assistant, Austin McWhirter, whose significant contribution is hereby acknowledged.
- 10.
Based on a Labour Canada report into part-time work published in 1983. See, for example, Simpson (1986) who finds that part-time work is less well paid, even after adjusting for characteristics, as well as having less job protection from collective agreements.
- 11.
Party platforms are collected by the Université Laval’s Electronic Manifestos Canada, POLTEXT: Textual Data for Policy Analysis and available at https://www.poltext.org/en/part-1-electronic-political-texts/electronic-manifestos-canada.
- 12.
The Family Allowance had been increased to $20 and indexed to inflation during the previous Liberal minority government with the support of the NDP. The Allowance had grown to $25.68 by 1978 and was reduced to its original $20 with the introduction of the Child Tax Credit.
- 13.
Macdonald had also been Minister of Energy, Mines and Resources at the time of the oil price crisis in 1973–1974 and had introduced a national oil company, PetroCanada, and a national oil policy that subsidized Eastern Canadian consumers at the expense of Western Canadian producers. Macdonald’s appointment was also viewed as a consolation prize after his leadership ambitions had been derailed in 1980 by the snap election and Trudeau’s decision to remain as Liberal leader.
- 14.
If you detect some envy from a researcher who helped to pick up the pieces of the resource-challenged Mincome experiment in the 1980s, mission accomplished.
- 15.
Background to the Commission Report included ninety-six volumes of briefs and testimony supplemented by what is described as “the most extensive research program in Canadian history” (Mallory 1986, 598).
- 16.
Concern with work incentives motivated another Commission option that would have imposed job search and other employment preparation requirements on young adults, but then it would not have been an unconditional income security plan and we do not discuss it here.
- 17.
The greater reach of the UISP along the income spectrum for these families was likely intentional, as these family groups were singled out for special income guarantee supplements. In addition, the elderly were allowed to keep OAS payments of as much as $276 per person per month or $3312 per annum.
- 18.
As the note to Table 7.1 indicates, median family income is only available for couples with any number of children, not specifically two children.
- 19.
Canadian federal budget speeches and other archived budget documents are online at: https://www.budget.gc.ca/pdfarch/index-eng.html.
- 20.
- 21.
Since 1989, the Family Allowance had also been subject to clawback, effectively a tax, for parent incomes exceeding $50,000.
- 22.
This limited indexing formula was consistent with the child benefits to be replaced and other aspects of the personal income tax system at the time.
- 23.
Canadians file taxes on an individual basis but spouses are linked to determine family net income.
References
Autor, David. 2019. Work of the Past, Work of the Future. Working Paper 2558, National Bureau of Economic Research, February. Online at http://www.nber.org/papers/w25588.
Beach, Charles. 2014. What Has Happened to Middle-Class Earnings? Distributional Shifts in Earnings in Canada, 1970–2005. Working Paper No. 131, Canadian Labour Market and Skills Researcher Network, March.
Bennett, S.E. 1986. Do Public Program Participants Understand Public Program Rules: The Manitoba Basic Annual Income Experiment. Canadian Pubic Administration 29 (3): 462–468.
Choudhry, Saud, and Derek Hum. 1995. Graduated Work Incentives and How They Affect Marital Stability: The Canadian Evidence. Applied Economics Letters 2: 367–371.
Economic Council of Canada. 1975. Looking Outward: A New Trade Strategy for Canada. Ottawa: Information Canada.
Heisz, Andrew. 2016. Trends in Income Inequality in Canada and Elsewhere. In Income Inequality: The Canadian Story, ed. David A. Green, W. Craig Riddell, and France St-Hilaire. Volume V of The State of the Art series, Institute for Research on Public Policy, February.
Hum, Derek. 1986. UISP and the Macdonald Commission: Reform and Restraint. Canadian Public Policy, Volume 12, Supplement: The Macdonald Report: Twelve Reviews, February, 92–100.
Hum, Derek, and Saud Choudhry. 1992. Income, Work and Marital Dissolution: Canadian Experimental Evidence. Journal of Comparative Family Studies 23 (2): 249–265.
Hum, Derek, and Wayne Simpson. 1991. Income Maintenance, Work Effort, and the Canadian Mincome Experiment. A study prepared for the Economic Council of Canada. Ottawa: Canadian Communication Group Publishing, Minister of Supply and Services Canada.
Hum, Derek, and Wayne Simpson. 1993. Economic Response to a Guaranteed Annual Income: Experience from Canada and the United States. Journal of Labor Economics 11 (1), part 2: S263–96.
Hum, Derek, and Wayne Simpson. 1994. Labour Supply Estimation for Public Policy. Journal of Economic Surveys 8 (1): 57–81.
Keeley, Michael, and Philip Robins. 1978. The Design of Social Experiments: A Critique of the Conlisk-Watts Assignment Model. Research Memorandum No. 57, Stanford Research Institute Centre for the Study of Welfare Policy (Menlo Park, CA).
Kesselman, Jonathan. 1993. The Child Tax Benefit: Simple, Fair, Responsive? Canadian Public Policy 19 (2): 109–132.
Mallory, J.R. 1986. The Macdonald Commission. Canadian Journal of Political Science 19 (3): 597–613.
Rifkin, Jeremy. 1995. The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era. New York: G.P. Putnam & Sons.
Robins, Philip K., and Richard W. West. 1982. Program Participation and Labor-Supply Response. Journal of Human Resources 15: 488–523.
Schumpeter, Joseph. 1942. Capitalism, socialism and democracy, 1st ed. New York: Harper & Brothers.
Simpson, Wayne. 1986. Analysis of Part-time Pay in Canada. Canadian Journal of Economics 19 (November): 798–807.
Simpson, Wayne, Greg Mason, and Ryan Godwin. 2017. The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later. Canadian Public Policy 43 (1): 85–104.
Wiegers, Wanda. 2001. The National Child Benefit: Social Inequality Under the New ‘Social Union’. Ottawa Law Review 33 (1): 25–93.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2021 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Simpson, W. (2021). Development of a “Basic Income” in Canada (the 80s and 90s). In: Is Basic Income Within Reach?. Exploring the Basic Income Guarantee. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-66085-7_7
Download citation
DOI: https://doi.org/10.1007/978-3-030-66085-7_7
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-66084-0
Online ISBN: 978-3-030-66085-7
eBook Packages: Economics and FinanceEconomics and Finance (R0)