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 growthÂ 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 to justify cuts today to deal with exaggerated fiscal problems tomorrow.
In a somewhat similar vein, my earlier post for Economy Lab argues that inequality between generations is hugely over-stated and, more specifically, that differences between the economic well-being of young people 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.
I recommend to you the Institute’s just-released paper “Towards a More Equal Canada” and the commentaries which will be published over the next few weeks.