When the baby boom grows old: Impacts on Canada's public sector

Abstract

Canada, like many other countries, is experiencing a significant aging of its population. This trend is expected to increase the “burden” on the public sector of major cash transfer and in-kind benefit programmes. The estimated size of the burden depends on projections of demographic change, economic growth, and structural aspects of the major age-sensitive public-sector programmes. The burdens are analysed for 2016 and 2036, the period when demographic aging may be expected to have its most adverse impacts on old-age dependency ratios and public-sector programme costs. Contrary to many popularly expressed concerns, demographic aging is not the most important factor in determining future public-sector costs and revenues. Rather, aspects of the design and management of public-sector programmes represent the greatest area of uncertainty. These areas are more amenable to public policy initiatives and gradual adjustments within the half century time-frame of the projections.