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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