Canada’s Economic Model Example

Canada’s Economic Model Example

  1. The Administration of Canada has released a transition intend to raise the get older of eligibility for LATER YEARS Security from 65 to 67 years. Using the problems discussed in this program, discuss the professionals and cons of the government’s plan. Be sure to include a conversation of Canadian demographics and the implications for the OAS system.Canada’s Economic Model Example

Plans to rise age eligibility for Old Age Security from 65 to 67 years will make the individuals needy when they retire, and society has an responsibility to prevent them from slipping into severe poverty. A non-contributory pension scheme, such as LATER YEARS Security, means that all seniors have a simple level of income. It can be argued whether the elderly need a special income redistribution program, aside from the fact that LATER YEARS Security is a national program and therefore the price tag on providing income support for older people is borne by all Canadians, whereas welfare programs are funded by the provinces.Canada’s Economic Model Example


With the Canadian inhabitants aging a rise in the proportion of older people, will certainly reduce the actual labour force in relation to the size of the older populace. One would expect there to be fewer people in the labour force to provide support for those in old age. However there are two attributes to the upsurge in age by 2 years. The pros include if the space of retirement decreases, the average person has more working years to build up funds. This shows that a person might enjoy better paychecks in the excess 24 months before retiring and claiming for the OAS. Another expert factor is an individual can contribute more to the market in the additional two years. This can ensure that there are less visitors to be supported who rely on welfare support and income transfer. Now people are living much longer than they have in the past, so increasing the eligibility from 65 to 67 time seems a wise way. With people living longer and better healthcare resources being provided, healthy individuals can enjoy better paychecks in those 2 yrs and conserve more money for his or her retirement. Nevertheless the flip side to the upsurge in eligibility is the fact that it’ll greatly boost the cost of OAS, while concurrently reducing the percentage of employees who pay taxes to keep funding the program. A greater amount of folks will retire at 67 and will boost the cost once they start receiving the benefit. A demographic switch to a society which is aging will require a wide system that comes with a lifestyle that is healthy and action to making associations between more capable teachers and young Canadians not an increase in this eligibility. Keeping the non-workers into context increasing the age of eligibility will increase in the amount of retires under the poverty range. 2 yrs is a long time for a senior that is relying on receiving OAS at 65 years. Also two fewer years of eligibility will definitely cost money to an individual and can have to work with from their pension savings. The very last con deals with the fact that increasing this limit by 2 years could keep the seniors tangled up in the labor force making it problematic for the millennials to get into.Canada’s Economic Model Example

  1. Compare the demand for health care services with the demand for education services in Canada. Explain why each one of these services are similar in a few ways, but quite different in other ways.

The demand for health care is increasing with the aging of the baby boomers. People aged 65 and above made up of around 14% of the full total Canadian population this year 2010, and by 2036 it is projected to be around 25% of the full total Canadian population. Using the increase of the quantity of individuals aged 65 years and above, the demand in health care will also go up. Around 75% of individuals that are 65 years and above have at least one long-term disease. Senior citizens, overall, have more doctor and hospital goes to and they take more prescription medications. Spending on healthcare is thought to increase by an approximate 4. 5% per calendar year from 2013 to 2018.

Like the upsurge in demand for healthcare services, the demand for education services is also going up. With the constant globalization and a rise of your demand in professional skill sets, more and more Canadians are looking into higher and special education in order to make themselves stick out in the competitive job market. With this there’s a greater demand in private and for-profit education, where there is more emphasis on an increased quality of education.

Both the needs for health and education services hinge hugely on the increase of population. Both companies are heavily dependent on funds from the government. Because both companies are funded from the federal government, the developments are limited leading to Canadians to look into private clinics and schools, which cost the consumers but also provide a higher degree of service. The primary difference between the demand of both services is that the health attention is vital for the well-being of people, whereas education is not a necessity for success. The difference between education and health is the fact education produces benefits that later affects an individual to better health outcomes Health is vital for an individual to receive an education. A person can carry on with an existence without education however can’t live without satisfactory healthcare. Therefore the demand for healthcare services will be greater than the demand for educational services.Canada’s Economic Model Example

  1. Evaluate each of the following assertions.
  1. Niskanen’s style of bureaucracy means that the level of bureaucratic output occurs where marginal benefit is equal to marginal cost.

Niskanen’s style of bureaucracy contends that in the market-oriented private department, someone who must ascend into a political career does so by extending the benefits associated with their business or the division. The individual’s pay increases with the organization’s benefits. Conversely, civil servants tend to concentrate on such things as perquisites of office, wide open notoriety, electric power, and support since open up doors for money related rises are insignificant. Niskanen suggested that power, status, thus on are emphatically related with the amount of the official’s financial plan and inferred that the bureaucrat’s goal is to boost their financial plan. Efficiency requires that a unit of output be produced sufficient as long as the additional reap the benefits of that outcome surpasses the extra cost. Subsequently, the effective output is where marginal cost equals marginal advantage, not total cost equals total advantage. A significant implication of Niskanen’s model is the fact bureaucrats have incentives to expend effort on promotional activities to raise the sponsor’s perceptions of the bureau’s benefits. Hence, the bureaucrat’s craving to are substantial a world as could be likely under the circumstances prompts to an inefficiently expansive administration.Canada’s Economic Model Example

  1. Arrow’s impossibility theorem refers to the result that an income tax system can’t be productive and levy a good duty on the last money of income acquired by the highest-income individual.

Arrow’s Impossibility Theorem implies that it isn’t possible to figure out a decision-making guideline that concurrently satisfies lots of realistic actions. The implication is the fact democracies are inherently prone to inconsistency regarding general public goods and other decisions. The theorem only says that this cannot be assured that society can find a steady decision making guideline. For certain habits of individual choices, no problems come up.

The most-preferred level of spending of a person is a decreasing function of the individuals income. That’s just because a person’s income elasticity of demand for the publicly provided good is significantly less than the purchase price elasticity of demand for the publicly provided good. That means everyone with lower income wants more government spending, and everyone with higher income would like less administration spending. Arrow’s impossibility theorem demonstrates, given a standard criteria there is absolutely no appropriate tool for the condition of public choice theory to determine the performance of relatively imperfect mechanisms. Majority rule may well not always yield an equilibrium however, majority rule will bring about choosing plans most favoured by the median voter such guidelines are not actually efficient. This will generate inefficiencies within the society as tax can’t be levied since as Arrow explained it is impossible to discover a decision making rule.Canada’s Economic Model Example


  1. List and discuss the suggestions created by Courchene and Allan to reform the EI program through the 2008 Canadian recession.

Courchene and Allan made some key recommendations to reform the EI program. The primary criticism Courchene and Allan outlined of the EI Program was the interregional variability in the ratio of EI beneficiaries to the unemployed. EI benefits derive from the number of hours functioned and the unemployment rate of the region where people are working. Workers in high unemployment rate areas need only work 420 time to acquire EI benefits, while those in low unemployment areas must work 700 hours. Secondly another concern expressed in particular by Courchene and Allan indicated particular concern about Canadians who go through long spells of unemployment and exhaust their EI benefits. Their first recommendation is that the EI program is going back to insurance key points only, and this there should be uniform qualifying durations and a uniform method of determining EI benefits. Their view is the fact rather than participate EI, benefits such as maternity, parental, sickness, and training should be funded by other programs such as the federal government government’s Canada Social Transfer. Courchene and Allan also made the point that no special procedures should get to consistent users of the EI program, and this employers shouldn’t be saddled with higher EI prices than are employees.Canada’s Economic Model Example

  1. Internal federal government documents project the expense of the OAS system will climb from $36. 5 billion this year 2010 to $48 billion in 2015. By 2030-when the amount of seniors is likely to climb to 9. 3 million from 4. 7 million now-the cost of the program could reach $108 billion. Discuss how these studies have affected the Government of Canada to add a plan to improve the age of eligibility for OAS from 65 to 67 by 2023.

The data provided by the government agencies office say there were four tax payers in the workforce for each older this year 2010, yet by 2030 it’ll drop to two for each senior.

In order to support the OAS system the age of eligibility needs to rise to keep more personnel in the labour make and pay their income taxes. Each of them say that by delaying OAS the government is delaying the financing. Since the Canadian populace is aging and people living a longer life, the amount of taxpayers is dwindling, this program sometimes appears as unsustainable in its current form. To be able to continue with the support of the program the system needs to be addressed accurately, this has the capability to undermine Canada’s financial position. It really is still distressing knowing as seniors start retiring; the cost to the national income account of providing open public pensions will increase exponentially. By the time the increase in eligibility is fully implemented it will increase online revenues of the government but will reduce the provincial revenues. The reform may induce some recipients of the OAS who otherwise have designed to retire at age 65 or 66 to delay their retirement life.Canada’s Economic Model Example

As life span increases it’ll make more recipients of the OAS acquiring the benefits.

OAS costs will increase as seniors continue steadily to live long and healthy lives. Living longer and healthier means seniors are collecting the OAS advantage for much longer periods than anticipated, significantly increasing the price of this program. Individuals will be retiring early when they could be working extra and saving for the retirement. To be able to insure the fund can be sustainable the government need to boost the years of eligibility. Delaying pension would make the workforce larger, and seniors can reap the benefits of it by keeping themselves effective and presenting themselves more years to work to save lots of for retirement in an age of longer lifespans.

That is why numerous countries around have taken steps to reform open public pensions by increasing their age groups of eligibility and Canada should not be an outlier. OAS experienced an unfunded responsibility with the age of eligibility at 65. The plan to change the eligibility years would decrease the liability of the fund not supported by the government. Keeping this into point of view delaying the eligibility for OAS by two years was a moderate step to ensure that long-term cost of the program diminishes.Canada’s Economic Model Example