The Limits of Demography

Here is a piece I wrote for today’s Globe Economy Lab re the Department of Finance report on the costs of an aging society.

The key point is that the mainstream doom and gloom projections of the costs of falling labour force growth  ignore the positive impacts which can be expected as and when we get to a situation of tight labour markets. If we actually get to a low unemployment rate because of fewer labour force new entrants, participation rates of older age groups will rise and we can confidently expect labour productivity growth to increase. Sure, there will be additional social program costs as the population ages, but demographic gloom and doom is overdone by the Harper government to justify cuts today to deal with exaggerated fiscal problems tomorrow.

In a somewhat similar vein, my earlier post for Economy Lab argues that the issue of inequality between generations is over-stated and, more specifically, that differences between the economic well-being of young people today and their baby boomer parents are greatly overdone.

Now that I have retired from the CLC, I shall be blogging for the Broadbent Institute on a regular basis, but will continue to post here on an occasional basis.

I commend to your attention the just-released Institute paper, “Towards a More Equal Canada“, and the many commentaries  which will be posted to the website over the coming weeks.

Andrew Jackson is Senior Policy Adviser with the Broadbent Institute and the Packer Professor of Social Justice at York University.

One comment

  1. Every time the whole demographic time bomb thing comes up lately, I ask how big a shift it’s going to take before we stop having massive unemployment.
    It seems to me the real worry here is that if the population ages too much, labour markets might get sufficiently tight that employers will have to start paying people a decent wage. And of course while massive unemployment and erosion of wages are merely “natural” results of the “free” market and cannot be interfered with under any circumstances, the threat that working people might gain bargaining power and be able to insist on decent pay is, as we’ve started to see in the oil patch, absolutely insupportable and calls for vigorous government interference, up to and including bringing in third world labourers with reduced rights. Funny how markets don’t have to be free any more as soon as they threaten a rich person.

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