Welfare Generosity and Well-being: Evidence from Canada

This paper explores the association between provincial welfare generosity and well-being of poor Canadians. The well-being indicators include poverty incidence, depth of poverty, labor supply, time spent with kids, health status, happiness, and education. Using both macro and micro- level data over the years 1989 to 1996 and 1998 to 2009, I examine the link between welfare generosity and poverty. The micro-level information of General Social Survey (GSS) is used to correlate various indicators of well-being with measures of welfare generosity. The analysis of macro-level CANSIM data is used as a robustness check of the poverty estimation using GSS. In this study I considered total welfare generosity as well as the subcategories, social assistance and other social services spending, as the measure of welfare generosity. With regards to poverty, the result suggest no evidence of determinate relationship between total welfare generosity and poverty rate. However, generosity of social services is associated with a lower poverty rate, while generous income assistance is associated with a higher poverty rate. The total welfare generosity shows a significant association with reduction in employment rate and high school dropout rate among the poor. In the case of health, both total welfare generosity and social assistance appear as significant determinants of better health outcome of the poor. Receipt of other social services appear as a significant determinant of poor individuals time spent with kids and happiness.