This article examines the effects of a change in the Canada/Quebec Pension Plan (C/QPP) disability benefits on the labor supply of older Canadian workers. I obtain my estimates by exploiting a large increase in benefits that only occurred in the QPP program, which only operates in Quebec, while benefits in the CPP program, which operates in the rest of Canada, were unaffected. Unlike the existing estimates from the United States, as well as earlier Canadian obtained by Gruber, I find that disability benefits are not associated with a large increase in the nonparticipation of older men.

This paper proposes a Bayesian approach for estimating and smoothing the baseline hazard in a discrete time hazard model. The hazard model is specified as a multiperiod probit model and estimated using a Gibbs sampler with data augmentation. The baseline hazard specification is smoothed using the smoothness priors introduced by Shiller (1973). The methods proposed in this paper are then used to study the effect of Canadian Unemployment Insurance eligibility rules on employment durations from New Brunswick, Canada.