Population Aging and Work Life Duration in Canada

Population aging has brought concerns that the added years of life are predominantly being spent in retirement, contributing to a labour shortage and pressure on public finances. These concerns, however, usually omit an appropriate account of the changes in labour force participation and hours worked (behavioural components), factors that could be playing toward or against the tides of population aging (structural components) throughout the life cycle. This article estimates work life duration, an expected labour supply that incorporates mortality, labour participation, and workload (hours worked) at each age, and analyzes the work life ratio, the share of life expectancy devoted to working. It also decomposes the changes in work life duration into demographic and behavioural components, thus isolating the contribution of population aging to the change between 1981 and 2016. The results suggest that work life duration has not declined as the population has aged. Instead, we find that between 1981 and 2016, work life duration increased by 4.96 years, whereas its ratio to life expectancy increased by 3.55 percentage points. Labour force participation has been the main driver of these changes, contributing 3.57 years compared with 0.73 and 0.65 years for workload and mortality, respectively. These results bring counterarguments into the ongoing debate in Canada to increase the retirement age in the name of shrinking work life duration to finance increasing life expectancy.