SEDAP: Research Paper Abstracts (2011)

  1. The Age Pattern of Retirement: A Comparison of Cohort Measures
    Frank T. Denton, Ross Finnie, and Byron G. Spencer

  2. Measures of retirement that take a cohort perspective are appealing since retirement patterns may change, and it would be useful to have consistent measures that would make it possible to compare retirement patterns over time and between countries or regions. We propose and implement two measures. One is based on administrative income tax records and relates to actual cohorts; the other is based on a time-series of cross sectional labour force surveys and relates to pseudo-cohorts. We conclude that while the tax-based observations for actual cohorts provide a richer data set for analysis, the estimated measures of retirement and transition from work to retirement based on the two data sets are quite similar.

  3. The surprisingly large policy implications of changing retirement durations
    Peter Hicks

  4. The paper reviews evidence that suggests that, over the coming two decades, people are likely to stay in the work force at least five years longer, possibly by considerably more. The implications for policy are surprisingly large and surprisingly unrecognized. Recent trends, if extended into the future, suggest that changes of this magnitude are quite likely given a continuation of past labour market conditions. However, these past trends do not reflect new pressures that will work strongly in the direction of even shorter durations of retirement and longer durations of work.

    These new pressures will result from changes in labour supply and demand that will result from the baby boom generation moving into traditional retirement years in large numbers, increasing the demand for older workers. On the supply side, there will be a large in increase in the educational levels and skills of older people. The effect of market forces could be further enhanced by policy action.

    In other words, a five year extension of working life is the minimum that should be included in most future labour market scenarios. Delaying work-retirement transitions by even this amount would have large, positive economic and fiscal effects, significantly reducing the well-known negative effects of population ageing. They would have particularly important consequences for pension policy, with a dramatic reduction in the need for retirement savings and, particularly if accompanied by flexible work-toretirement pathways, would reduce the risk of changed income needs in old age.

    A range of other social benefits, including greater individual choice and well-being, also seem likely – if harder to quantify. However, as with any large social change, distributional consequences are inevitable. A few groups could be relatively worse off in a world where the norm was for work to be extended later in life. In the absence of strategy for addressing the needs of these potential losers, there may well be reluctance to take policy action, despite the likelihood of large gains for most, and on many fronts.

  5. Economic Security in an Aging Canadian Population
    Robert L. Brown

  6. This paper has been written to bring up to date materials in a monograph that was a part of the Butterworths series of monographs in social gerontology, in particular, the 1991 monograph entitled: Economic Security in an Aging Population (Brown, 1991).

    The paper reports on research that indicates that today’s retirees are doing very well in terms of their replacement ratios and that Canadian poverty rates among the elderly are low relative to OECD (Organization for Economic Co-operation and Development) countries.

    Government-sponsored plans have been strengthened either through explicit expansion (e.g., the Guaranteed Income Supplement (GIS)) or through the reform of the Canada/Quebec Pension Plans (C/QPP). Also important is the maturation of Employer-sponsored pension plans. However, for the latter, coverage rates are down.

    This has created concern that future generations of Canadian retirees may not be able to experience the standard of living that is the reality for today’s elderly.

    The paper concludes that the aging of the population is not the cause of the increased cost of health care and social security today. Even by 2031, when the entire baby boom will be aged 65+, the impact of population aging on costs will be manageable. The paper also discusses the affordability of these systems if the normal age at retirement were to rise.

  7. The Canadian Elder Standard - Pricing the Cost of Basic Needs for the Canadian Elderly
    Bonnie-Jeanne MacDonald, Doug Andrews, and Robert L. Brown

  8. We determined the after-tax income required to fi nance basic needs for Canadian elders living with different circumstances in terms of age, gender, city of residence, household size, homeowner or renter status, means of transportation, and health status. Using 2001 as our base year, we priced the typical expenses for food, shelter, medical, transportation, miscellaneous basic living items and home-based long-term care for elders living in fi ve Canadian cities. This is the fi rst Canadian study of basic living expenses tailored to elders instead of adults in general, prepared on an absolute rather than a relative basis. We also accounted for an individual’s unique life circumstances and established the varying effect that they have on the cost of basic expenses, particularly for home care. We found that the maximum Guaranteed Income Supple ment and Old Age Security benefi t did not meet the cost of basic needs for an elder living in poor circumstances.

  9. The Recent Evolution of Retirement Patterns in Canada
    Pierre Lefebvre, Philip Merrigan, and Pierre-Carl Michaud

  10. Using data from three waves of the General Social Survey on retirement and older workers (1994, 2002 and 2007), we document the evolution of retirement patterns over the last three decades. We combined the analysis of retirement ages of actual retirees with data on expected retirement ages of current workers to create a longer perspective on changes in retirement behaviour in Canada. We also investigate trends in work after retirement. Our findings are in line with findings from other countries. There is an upward trend in retirement ages which likely started around year 2000 for cohorts born after 1945. This trend contrasts with the slow decline in retirement ages observed prior to the end of the millennium. While the downward trend was likely due to factors such as the offering of early retirement programs in private firms, the upward trend is likely to be caused by a wider variety of sources, including better health, less pervasive defined benefit pensions and in general less generous pensions.

  11. Modelling the Age Dynamics of Chronic Health Conditions: Life-Table-Consistent Transition Probabilities and Their Application
    Frank T. Denton and Byron G. Spencer

  12. We derive transition probability matrices for chronic health conditions using survey prevalence data. Matrices are constructed for successive age groups and the sequence represents the “age dynamics” of the health conditions for a stationary population – the probabilities of acquiring the conditions, of moving from one chronic conditions state to another, and of dying. One can simulate the life path of a cohort under the initial probabilities, and again under altered probabilities to explore the effects of eliminating a particular condition or reducing its mortality probabilities. We report the results of such simulations and note the general applicability of the methods.

  13. Revue de la littérature sur l’évolution future de l’espérance de vie et de l’espérance de vie en santé
    Robert Bourbeau, Jacques Légaré and Nadine Ouellette

  14. Like many industrialized countries, Canada is experiencing significant population aging and this phenomenon, inherited from the demographic transition, will intensify in the coming years. Mortality changes, especially at older ages, will contribute greatly to this phenomenon, hence the importance to be aware of the latest and forthcoming developments. It is also imperative to uncover recent and future health trends in the elderly population, and to investigate whether extra years of life gained through increased longevity will be spent in good or bad health. Thus, through this literature review, we first outline the academic debate on the future of mortality, and more specifically of life expectancy at birth. Since the debate essentially crystallized around two main competing views, one that supports sustained mortality gains in the future and one that expect instead these gains to peak, the arguments of each group and the main criticisms they face are exposed. We then provide a detailed account of a concomitant debate on the quality rather than the quantity of years lived. The three competing theories on the future of morbidity - compression of morbidity, expansion of morbidity and dynamic equilibrium - are presented and their relevance is discussed on the basis of empirical data. The difficulties inherent in defining the concepts of health and illness, and to obtain comparable indicators over time and space are highlighted.

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Last revised: Dec 8, 2011.