Tax Incentives and Older Workers: Evidence from Quebec's Tax Credit for Career Extension

Guy Lacroix and Pierre-Carl Michaud

Canadian Public Policy, 2025, vol. 51, issue 3, 265-283

Abstract: We present empirical evidence on the effectiveness of a tax policy designed to boost employment among older workers in Quebec, Canada. To evaluate its impact on employment and earnings, we draw on multiple data sources and use a range of identification strategies. We begin with a difference-in-differences approach comparing Quebec and Ontario but find no robust effect on employment. Moreover, the common trend assumption fails to hold for most age groups, limiting the credibility of this strategy. To address this, we use Longitudinal and International Study of Adults data to implement a staggered adoption design, leveraging variation across birth cohorts within Quebec. This analysis also shows no impact on labour force transitions, although we detect a modest increase in earnings for women. We further use an alternative identification strategy using the Longitudinal Administrative Databank, exploiting variation in treatment intensity over time within Quebec. Consistent with prior findings, we observe no significant effect on labour force transitions but again identify a small positive effect on women's earnings and a reduction in net tax liability among affected workers. Taken together, our results suggest that the tax measure neither effectively increases employment among older workers nor represents a cost-efficient approach to raising public revenues.

Keywords: older workers; labour market participation; tax incentives (search for similar items in EconPapers)
Date: 2025
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