The evolution of pension coverage of young
and prime-aged workers in Canada
by René Morissette and Marie
Drolet
Business and Labour Market Analysis Division
Analytical Studies
Branch research paper series, No. 138
This paper assembles data from several
household surveys to document how pension coverage of young and older workers
has evolved in Canada between the mid-1980s and the mid-1990s.
The main
findings are the following: first, both administrative data from the Pension Plans
in Canada (PPIC) database and data from household surveys show an increase in
Registered Pension Plan (RPP) coverage for women. In contrast, while PPIC data
show a decrease in coverage for men, household surveys indicate no downward trend
for males. Second, sample aggregates hide interesting differences within the population.
We find that the pension coverage of young workers (aged 25-34) has declined relative
to prime-aged workers (aged 35-54). Young males have experienced a decline in
coverage while RPP coverage has remained fairly stable for prime-aged men. In
contrast, pension coverage has remained fairly constant for young women but has
risen substantially for prime-aged women.
There are numerous potential
factors which might be associated with pension coverage. This study is able to
focus on three: changes in the distribution of employment by industry, changes
in the skill level of jobs (as proxied by wages) and changes in union density.
Factors which could not be addressed include legislative changes, changes in the
distribution of employment by firm size and changes in workers' level of seniority.
Of the factors covered, we find that the decline in union density and employment
shifts towards low-coverage industries appear to be the most highly correlated
with the decline in RPP coverage of young men. The growth in prime-aged women's
coverage appears to be related mainly to their greater propensity to be employed
in highly paid and highly skilled jobs, which have a high likelihood of having
pension coverage. The decline in the unionization rate of these women partly offsets
this trend.
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