Some Economic and Demographic Implications of Future Population Change

Some Economic and Demographic Implications ofFuture Population Change FRANK T. DENTON and BRYON G. SPENCER Introduction The population of a country is in a perpetual state of change. New members arrive, through birth or immigration; old members depart, through death or emigration; and all members age. When arrivals continue to exceed departures, the average age of the population normally tends to fall and the population increases in size. When departures dominate, the average age normally tends to rise and the population size to decrease. Many demographers believe that Canada is now on a long-run path in which natural growth in population will cease or, at the least, be slower. For Canada, a low natural rate of growth would represent a dramatic change compared to recent decades. If a very low rate is maintained, the average age of the population, and of the labour force, will increase substantially, while the proportion over age 65 will more than double. To the extent that demand for goods and services is related to age, major population changes will result in significant changes in patterns of consumption . Also, to the extent that size and productivity of the labour force is determined by age, there will be changes in output per capita. These two types of effects on the economy - effects on demand and on productivity - should be studied together if overall consequences of population change are to be assessed properly. This paper considers both types of effects, and their implications for the Canadian economy in the decades ahead. Much of the following analysis is based on a computer simulation model - a combined econJournal ofCanadian Studies Vol. 14, No. I (Printemps 1979 Spring) omic-demographic system developed by the authors. While the model does not relate directly to Canada, the experimental results have implications for the country. Demographic Background and Prospects Table 1 displays the components of population change in each five-year period for the last half-century. The birth rate declined through the 1920s and into the 1930s; it rose in the 1940s, to reach a plateau which was maintained until the end of the 1950s, at which point the postwar baby boom ended. The birth rate declined in the 1960s and early 1970s. Whereas, in the period 1951-55, births per 1,000 population had averaged 28.0, in 1971-75 the average was only 15.9. Birth rates of the recent past are the lowest on record for Canada, but the sharp decline in birth rates is a phenomenon common to developed countries. The death rate, too, has fallen. By 1971-75, average deaths per 1,000 population were 7.4, Table 1 Components of Population Change, 1921-25 to 1971-75 (Average annual rates per 1,000 population) Rate of Rate of Birth Death natural immigration rate rate increase Gross Net 1921-25 27.4 11.3 16.1 10.7 -0.9 1926-30 24.1 11.2 12.9 14.5 5.6 1931-35 21.6 9.9 11.7 1.6 -0.5 1936-40 20.7 9.9 10.8 1.3 -1.0 1941-45 23.7 9.9 13.8 1.0 -1.1 1946-50 27.6 9.3 18.3 6.5 2.3 1951-55 28.0 8.5 19.5 10.7 7.9 1956-60 27.6 8.0 19.6 9.3 5.9 1961-65 24.2 7.7 16.5 5.2 2.3 1966-70 18.1 7.5 10.6 8.8 4.9 1971-75 15.9 7.4 8.5 7.5 5.3 Note: Five-year average rates are calculated from annual rates for the periods January 1 to December 31 (e.g., the 1921-25 averages relate to the period January 1, 1921 to December 31, 1925). Birth and death rates are based on annual Statistics Canada data. Gross immigration rates are based on Department of Manpower and Immigration annual numbers of immigrants to Canada, with June 1 population figures used to calculate annual rates in all cases. Net immigration rates are derived residually by subtracting natural increase and immigration rates from overall rates of population increase. 81 compared...