Population Aging and Its Economic Costs: A Survey of the Issues and Evidence

The aging of the population is expected to result in substantial increases in the costs of maintaining health care and pension programs, and that is a source of widespread concern. However, a proper assessment requires that attention be given to all categories of government expenditure, including education and others associated with younger age groups, and not just those associated with the older population. It requires also that privately provided goods and services be considered, since their costs must be charged against the same national income as publicly provided ones. Beyond that, it is important to recognize that population change affects not only the demand side of the economy, but also the supply side -- the economy's productive capacity. An important conclusion is that while other influences will no doubt play a role, demographic effects by themselves are likely to cause government expenditure (all categories, all levels of government combined) to increase by no more than the rate of growth of the population, and by less than the rate of growth of the gross domestic product. Taking public and private costs together, and assigning appropriate weights to different age groups, the overall "dependency ratio" can be expected to remain at its current low level for another decade and a half or two decades, and then to rise as the baby boom generation retires in large numbers. However, the projected future ratio never reaches the levels of the 1950s and 1960s. Although the overall "burden" of population aging is manageable, major adjustments will be required in the coming decades, especially in the area of federal/provincial cost sharing. For the most part, though, the effects of population aging are predictable, slow, and some time off.population aging; economic costs; dependency ratio

What is Retirement? A Review and Assessment of Alternative Concepts and Measures

Since the concept of retirement is prominent in both popular thinking and academic studies it would be helpful if the notion were analytically sound, could be measured with precision, and would make possible comparisons of patterns of retirement over time and among different populations. This paper reviews and assesses the many concepts and measures that have been proposed, summarizing them in groupings that reflect non-participation or reduced participation in the labour force, receipt of pension income, end-of-career employment, selfassessed retirement, or combinations of those characteristics. It concludes that there is no agreed measure and that no one measure dominates. Instead, new measures continue to be proposed to take account of additional refinements as new data sets become available, thereby further restricting possible comparisons. The confusing array of definitions reflects the practical problem that underlies the concept of retirement: it is an essentially negative notion, a notion of what people are not doing – namely, that they are not working. A more positive approach would be to focus instead on what people are doing, including especially their involvement in non-market activities that are socially productive, even if those activities do not contribute to national income as conventionally measured.concepts of retirement, measures of retirement

Population, Labour Force, and Long-term Economic Growth

The Canadian population is aging as the children of the "baby boom" move into and through middle age and then on toward the retirement years. The "baby bust" that followed the boom has slowed the rate of population growth and reduced sharply the supply of young people entering the labour force. The rates of participation of women in the labour force are now approaching those of men and little can be expected in the way of continuing further growth from that source. Immigration has thus taken on an important role in determining the rates of population and labour force growth. We explore these and related issues and draw out their implications for Canada's economic growth prospects.population; labour force; immigration; baby boom; economic growth

Some Demographic Consequences of Revising the Definition of 'Old' to Reflect Future Changes in Life Table Probabilities

Sixty-five has long been used to define the beginning of 'old age'. Yet it is clear that the definition is arbitrary, and with continuing reductions in mortality and morbidity rates it will become increasingly inappropriate as time passes. We consider how the definition might be modified to reflect changes in life table probabilities, and how the future numbers and proportions in 'old age' would be affected. In a similar manner we consider also the redefinition of the 'oldest old' from a current definition of 85 and over.life table probabilities; old age

The Changing Economic Circumstances of the Older Population: A Cohort Analysis

The paper provides an analysis of the economic circumstances of Canadian cohorts in older phases of the life cycle. It begins by discussing the definition of "old" and the case for an upward revision of the traditional age-65 definition. It then goes on to consider changes in patterns of labour force participation of older age groups, their income levels and distribution, the importance of government transfer payments, consumption levels and patterns of saving, the extent of home ownership and mortgage status, and the effects of inflation.older population; cohort; income; consumption; saving

Population Change and Economic Growth: The Long-Term Outlook

The rate of growth of GDP can be expressed as the sum of the rates of growth of the population, the proportion of the population from which the labour force is drawn, the overall labour force participation rate, the employment rate, and the aggregate labour productivity ratio. Making use of this simple accounting identity we examine the contributions of the various components to the growth of GDP and GDP per capita in the half-century 1951-2001, decade by decade, and the prospective contributions to future growth under alternative demographic, participation rate, and productivity assumptions.population change; economic growth; simulation

Population Aging and Its Costs: A Survey of the Issues and Evidence.

The aging of the population is expected to result in substantial increases in the costs of maintaining health care and pension programs, and that is a source of widespread concern. However, a proper assessment requires that attention be given to all categories of government expenditure, including education and others associated with younger age groups, and not just those associated with the older population. It requires also that privately provided goods and services be considered, since their costs must be charged against the same national income as publicly provided ones. Beyond that, it is important to recognize that population change affects not only the demand side of the economy, but also the supply side -- the economy’s productive capacity. An important conclusion is that while other influences will no doubt play a role, demographic effects by themselves are likely to cause government expenditure (all categories, all levels of government combined) to increase by no more than the rate of growth of the population, and by less than the rate of growth of the gross domestic product. Taking public and private costs together, and assigning appropriate weights to different age groups, the overall “dependency ratio” can be expected to remain at its current low level for another decade and a half or two decades, and then to rise as the baby boom generation retires in large numbers. However, the projected future ratio never reaches the levels of the 1950s and 1960s. Although the overall “burden” of population aging is manageable, major adjustments will be required in the coming decades, especially in the area of federal/provincial cost sharing. For the most part, though, the effects of population aging are predictable, slow, and some time off.

Population Aging, Older Workers, and Canada’s Labour Force

The Expert Panel on Older Workers made recommendations designed to increase the labour force participation of older workers. We explore the implications that higher rates of older-worker participation would have for the overall size and age composition of the labour force, for the productive capacity of the economy, and for the incomes of Canadians. Our purpose is to assess the potential impact that increased participation of older workers might have in offsetting any anticipated adverse effects of population aging on standards of living.older worker, participation rates, productive capacity, population aging

How Well Does the CPI Serve as an Index of Inflation for Older Age Groups?

The issue of whether the official Statistics Canada Consumer Price Index provides an adequate measure of inflation for the elderly population is investigated. Price indexes are calculated for older households using weights from the Family Expenditure Survey. The indexes are calculated for the period 1949-96 with 11 categories of commodities and services, and for 1979-96 with 26 categories. Separate indexes are calculated for a range of age groups, for three types of households, and for lower-income households as well as households at all income levels combined. In all cases the calculated index series are very close to the official CPI series.CPI; inflation; older households

Chronic Health Conditions: Changing Prevalence in an Aging Population and Some Implications for the Delivery of Health Care Services

Since the prevalence of many chronic health conditions increases with age we might anticipate that as the population ages the proportion with one or more such conditions would rise, as would the cost of treatment. We ask three questions: How much would the overall prevalence of chronic conditions increase in a quarter century if age-specific rates of prevalence did not change? How much would the requirements for health care resources increase in those circumstances? How much difference would it make to those requirements if people had fewer chronic conditions? We conclude that the overall prevalence rates for almost all conditions associated mostly with old age would rise by more than 25 percent and that health care requirements would grow more rapidly than the population – more than twice as rapidly in the case of hospital stays – if the rates for each age group remained constant. We conclude also that even modest reductions in the average number of conditions at each age could result in substantial savings.Chronic conditions, aging population, health care resources