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A Populous Now: Aging of the future will be different from aging of

the past

Presentation to Plenary II, Conference on The retirement challenge: bridging the generations, Association of Canadian

Pension Management, September 10-12, 2013, Ottawa

Roderic Beaujot Emeritus Professor of Sociology

Western University

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Plan of the presentation • Population projections: accuracy and assumptions.

• Social and pension programs established under demographic and family

conditions of the 1960s.

• Demographic dividend a thing of the past.

• Aging of the future will be different from aging of the past. • Issues:

• Accommodating diverse families • Promoting independence rather than dependency • Assume stability rather than growth • Promote intergenerational equity

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Past Population Projections • Dominion Bureau of Statistics

• Hurd, 1939: projection of 15.4 m for 1971 • Charles et al., 1946: projections of 13.8 to 14.6 m for 1971 • Statistics Canada, 1971 Census: 21.6 m

• Canadian Mortgage and Housing Corporation • Economic Council of Canada • Office of the Chief Actuary, Canada Pension Plan

•Statistics Canada, 1974: projections of 28.4 to 34.6 m for 2001 •Statistics Canada, 2001 Census: 31.1 m

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Figure 1: Population observed (1971 to 2009) and projected (1972 to 2001) according to three scenarios of the 1972 to 2001 edition, Canada

Source: Statistics Canada, 2010: 78 Chart 5.1

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Figure 2: Age and sex pyramids (in relative value) of the Canadian population on July 1st 2001 according to the population projections of the 1972 to 2001 edition and the population estimates.

Source: Statistics Canada, 2010: 79 Chart 5.2

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Figure 3: Population observed (1984 to 2009) and projected according to some scenarios taken from previous editions (1984 to 2006, 1989 to 2011 and 1993 to 2016), Canada

Source: Statistics Canada, 2010: 79 Chart 5.3

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Figure 4: Total fertility rate observed (1971 to 2007) and projected (2008 to 2036) according to three assumptions, Canada

Source: Statistics Canada, 2010: 20 Chart 1.1

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Figure 5: Immigration rate observed (1951/1952 to 2008/2009) and projected (2009/2010 to 2035/2036) according to three assumptions, Canada

Source: Statistics Canada, 2010: 26 Chart 1.3

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0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

Life expectancy at birth, Canada

Males Females

Table 1: Life expectancy at birth, Canada

Age

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Life table measures, 1941 -- 2036

life exp. at 65 ODDS of surviving YEARS from age 65 to 95 Year Men Women Men Women 1941 12.8 14.1 1.1% 1.7% 1961 13.5 16.1 1.7% 3.4% 2009 18.3 21.4 8.7% 17.2% 2036 (H) 22.6 25.1 18.0% 31.4% 2036 (M) 21.6 24.2 15.4% 27.8% 2036 (L) 20.6 23.3 12.9% 24.3%

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Social and pension programs established under demographic and family conditions of the 1960s.

------ 1960s ----- • Growing population and growing economy • Small proportion of elderly, larger cohorts following behind

• Families

• Mostly breadwinner • Few lone parents (function mostly of widowhood)

• Poverty/Low Income

• Over-riding consideration: non-working population • Elderly • Female lone parent families • Unattached to economic families

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Canada/Quebec Pension Plan: Will plans established for past generations serve future generations?

------ 1967 ----- • Contributions from all workers (3.6%) • Payments only to those who had made contributions • Surplus ------ 1976 ----- • Full benefits for those who had made full contributions for the past 10 years • Widowhood benefit ------ 2003 ----- • Contribution rate (9.9%) for same benefits • Full benefits to those who had made contributions for 40 years • Until those who were 18 in 2003, transfers from younger to older generations

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Ratio of population aged 20-64 to population aged 65+, Canada, 1951-2031

• 1951: 6.97 • 1961: • 1971: • 1981: • 1991: 5.31 • 2001: 4.86 • 2011: 4.20 • 2021 H: • 2021 M: 3.22 • 2021 L: • 2031 H • 2031 M: 2.42 • 2031 L:

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Distribution of families by family structure

1981 2011 Married with children 55.0 36.2 Married without children 28.1 30.8 Common-law with children 1.9 7.5 Common-law without children 3.7 9.2 Female lone-parent 9.3 12.8 Male lone-parent 2.0 3.5 Total 100 100 Families more diverse, less traditional, more lone-parent families.

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Demographic and family change

Couple families with earning status of husband and wife 1981 2006 Husband only earner 32.7 15.7 Wife only earner 2.8 6.5 Both earning 52.5 60.4 Neither earning 12.0 17.4 Percent of couples with wives as primary breadwinner 1967: 11% 2003: 29% Couple families with children: Percent with two persons working full-time 1980: 21.5% 2005: 38.4%

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Demographic growth: 20th and 21st Centuries World population

1900: 1.6 billion 1950: 2.5 2000: 6.1 2050 – High: 10.9 2050 – Medium: 9.6 2050 – Low: 8.3

Canada 1900: 5.3 million 1950: 14.0 2000: 31.1 2050 – High: 56.1 2050 – Medium: 48.6 2050 – Low: 41.9

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Demographic dividend: a thing of the past

Fertility decline brings a demographic dividend some 20 years later: a concentration of people at young adult ages.

Benefits to Canada especially in the period 1966-1986. Lower fertility also benefits economic participation of adults. Continuation of low fertility brings less labour force renewal.

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Figure 10: Ratio of the number of people aged 15 to 24 and those aged 55 to 64, Canada 1921 to 2021

(Source: Statistics Canada, 2012: 9 Figure 5)

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Demographic dividend: a thing of the past Mortality decline of 20th Century brought more surviving

children, thus less “wastage of human resources,” as well as longer and healthier work lives.

Mortality decline of 21st Century will especially benefit people who are at older life stages.

Urbanization, the big migration of the 20th Century, brought

more efficiency in the availability of labour. Continued growth of largest cities may include some of the

inefficiencies of large population agglomerations.

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Aging of the future will be different from aging of the past: deaths

Early stages of mortality decline benefitted the survival of

infants, making for a younger population. In the 1970s, the improvements in mortality were still

affecting younger people more than older ones, and associated gains in life expectancy did not much affect the age structure.

With the delay of degenerative diseases, increased life

expectancy is now making for an older population.

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Aging of the future will be different from aging of the past: births and getting older

Aging started essentially because of the reduction in

fertility. Aging at the bottom. With fertility more stable than declining for the last 25

years, aging is a function of low births but not declining fertility.

All persons who remain in the population get older, one

year at a time. An important component of aging is the baby boom

moving up in the age pyramid. Aging in the middle.

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Societal implications: Stages of aging

First stage of aging, lower fertility: fewer dependent children was liberating for adults. Second stage, movement of the baby boom through the age structure: as the baby boom was entering or advancing in labour force ages, this brought a larger, better educated and eventually more experienced labour force. Third stage of aging, after about 2011: baby boom moving into ages of less labour force activity plus increased proportions of frail elderly. Aging at the top.

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Figure 11: Proportion of population by age group, observed (1981 to 2009) and projected (2010 to 2061), according to three scenarios, Canada

(Source: Statistics Canada, 2010: 48 Chart 3.9)

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Figure 12: Growth rate (in percentage) of age groups between 2006 and 2011, Canada

(Source: Statistics Canada, 2010: 48 Chart 3.9)

(Source: Statistics Canada, 2012: 5 Figure 2)

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Uneven cohort sizes: implications

• David Foot: larger cohorts are disadvantaged. • Beaujot: advantages to being followed by a larger cohort and

disadvantages to being followed by a smaller cohort.

• By having few children, the baby boom generation broke the social contract associated wherein elderly were supported by larger cohorts behind them.

• Inter-generational equity would now benefit from given generations saving for their own old age, be it at the individual or societal level.

• Why do people have children • Support in old age • Children are the joy of life

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Figure 13: Proportion (in percentage) of the population aged 65 and over, G8 countries, 2006 and 2011

(Source: Statistics Canada, 2012: 7 Figure 3)

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Figure 14: Proportion (in percentage) of the working-age population (aged 15 to 64), G8 countries, 2006 and 2011

(Source: Statistics Canada, 2012: 8 Figure 4)

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Until now aging has been accompanied with increased employment rates

Year Employment Labour Force Rate Participation Rate 1901 50.6 53.0 1951 52.2 54.3 1967 52.8 65.8 1971 1981 1990 61.7 67.1 2000 61.3 65.8 2006 62.6 2013 61.9 66.7

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Figure 15: Median age observed (2009) and projected (2010 to 2061) according to two scenarios, Canada

(Source: Statistics Canada, 2010: 74 Chart 3.45)

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Issues: accommodating diverse families Greater variability and fluidity in family transitions and family patterns bring

much diversity across families and in the family experiences of individual children, women and men. This means less rigidity and more pluralism of family forms, but also more inequality.

Differences especially between two-earner, compared to lone-parent families.

Further inequality due to assortive mating, especially by education. For children, Child Tax Benefit is a form of Guaranteed Annual Income. For lone parents: “equivalent to married tax deduction”. For adults: income splitting brings more inequality

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Issues: we should promote independence rather than dependency

Assumption: two-worker model, most adults working, most adults also want to have children.

Our provisions are often based on breadwinner model: widowhood

benefits, spousal allowance, pension splitting, deductions for dependent spouse.

Child benefits from the larger society rather than from parent’s employer:

health, education, parental leave, direct payments (Child Tax Benefit, Universal Child Care Allowance), child care.

Pensions individualized, with guaranteed payment in case of premature

death.

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Issues: assume stability rather than growth From an environmental point of view, limits are not food production, as

Malthus had thought, but absorbing the environmental consequences of human activity, especially in terms of greenhouse gas concentrations and climate change.

The economy needs to live within the ecology. While economies of scale have found much empirical support in the past

150 years, “beyond certain limits, demographic growth creates diseconomies of scale, reversing a trend which seems to have dominated much of human history” (Livi-Bacci, 2012).

Population stabilization is a powerful lever … diminishing resource consumption and environmental impact, reversing income inequality and increasing per capita utility without expanding the economy (O’Sullivan, 2012) .

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Issues: promote intergenerational equity

Pay-as-you-go schemes work in a growing population, or when larger generations follow smaller generations.

Youth see less value in the Canada Pension Plan and are less confident in its

sustainability. Individuals and generations saving for their own retirement (pensions,

health).

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Selected references Beaujot, Roderic. 2000. Earning and Caring in Canadian Families. Toronto: Broadview Press.

Beaujot, Roderic. 2003. Projecting the future of Canada’s population: Assumptions, implications and policy. Canadian Studies in Population 30(1): 1-28. Beaujot, Roderic and Don Kerr. 2004. Population Change in Canada. Toronto: Oxford University Press. Beaujot, Roderic, Zenaida Ravanera and Kevin McQuillan. 2007. Population change in Canada to 2017 and beyond: The challenges of policy adaptation. Horizons 9(4): 3-12. Beaujot, Roderic, Jianye Liu and Don Kerr, 2011. Low income status by population groups, 1961-2001. Pp. 99-117 in B. Edmonston and E. Fong, Editors, The Changing Canadian Population. Montreal and Kingston: McGill-Queen’s University Press. Foot, David K. 1998. Boom, Bust & Echo 2000: Profiting from the demographic shift in the New Millennium. Toronto: Macfarlane Walter & Ross. Foot, David. 2012. Is Canada headed for demographic disaster? Financial Post, 21 September, 2012. Légaré, Jacques, 2001. Ageing and social security program reforms: Canada in international perspective. ISUMA: Canadian Journal of Policy Research 2(2): 110-118.

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Selected references Le Bourdais, Céline. 2013. Portrait démographique des changements familiaux au Québec. Paper presented to

Comité consultatif sur le droit de la famille, 24 May 2013. Livi-Bacci, Massimo. 2012. A Concise History of World Population. Fifth Edition. Malden, MA: Wiley-Blackwell. McQuillan, Kevin and Zenaida Ravanera, Editors. 2006. Canada’s changing families: Implications for individuals and society. Toronto: University of Toronto Press. Myles, John, 2000, Incomes of seniors. Perspectives on Labour and Income 12(4): 23-32. O’Sullivan, Jane. 2012. The burden of durable asset acquisition in growing populations. Economic Affairs 32(1): 31-37. Statistics Canada. 2010. Population Projections for Canada, Provinces and Territories, 2009 to 2036. Ottawa: Statistics Canada Cat. No. 91-520-X. Statistics Canada. 2012. The Canadian Population in 2011: Age and Sex. Ottawa: Statistics Canada Cat. No. 98-311-X2011001. Statistics Canada. 2012. Portrait of Families and Living Arrangements in Canada: 2011 Census of Population. Ottawa: Statistics Canada Cat. No. 98-312-X2011001.