Abstract
The social assistance programs in Canada established under the Canada Assistance Plan of 1966 were aimed at providing financial assistance via provincial transfers to all individuals in need. Recently, two factors have led some provincial policy makers to advocate changes to their programs. First, significant restraints were placed on federal welfare transfers to non-equalization-receiving provinces in 1990. Second, in most provinces caseloads increased dramatically over the 1980s and 1990s.
An understanding of the dynamics of welfare participation and the effects of the programs are essential elements of any discussion on reforming the system. The current study focuses on welfare dynamics in Newfoundland, using data from the 100% Social Assistance Recipients file between January 1986 and June 1998.
The findings indicate that the majority of starting spells last less than one year, though a certain proportion last beyond six years. Exit rates tend to decrease rapidly at the start of the spells and remain relatively constant thereafter. Overall, single men leave welfare more rapidly than single women. The more educated exit a little sooner than the less educated, and re-entry occurs faster for the less-educated. Business cycles significantly influence exit: during strong economic growth, the exit rate was high, and during recession the rate was almost halved. Individuals living in Labrador have high exit rates. There is also a drastic increase in the exit rates at approximately six years. Returns to welfare generally occur shortly after exit, and at a rate that diminishes with time. Comparisons with welfare studies on British Columbia, Ontario and Quebec conclude that benefits and business cycle conditions have as important an effect on exit rates as in Newfoundland.
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