Assignment 2 – Canada’s Prosperity at Risk?


The aim of this assignment is to write a 6-9 page research paper that identifies the origins, causes, and regional impacts and proposes creative solutions to a major risk to Canada’s future prosperity. Your essay should be double-spaced text, 12pt font, include a properly formatted list of external references, and have the pages numbered. A secondary objective of this assignment is to practice writing in a manner that is effective and professional. At the end of this assignment, you should be able to draw on primary and secondary data sources in order to identify key trends taking place in Canada; synthesize scholarly research related to Canadian patterns of change over time; and demonstrate creativity, practicality and realism when proposing solutions to the challenges that Canada faces as a society.


Aging Population: Big Risk to Canada’s Prosperity


Aging population is a demographic issue whereby the population of a given country consists of more people with 65 years and above than young people. Generally, it is a sign of future decrease in population and a country may have to rely on immigration for a sustainable source of employment. Canada is currently experiencing a significant demographic change characterized by increased aging population. According to Statistics Canada (2015), the primary cause of population growth in Canada is immigration because the local population faces the challenge of low fertility rate and aging population, and by 2030 the number of deaths will be more than the number of births. CIA World Factbook (2015) suggests that the age structure of Canada consists of more aging population than young population. For example, in 2015 people with over 65 years accounted for 17.73% of the total population compared to young people aged between 0 and 15 years who accounted for only 15.46% of the total population. In fact, the median age of the total population is 41.7 years. According to Employment and Social Development Canada (2011), the median population of Canada in 1971 was 26.2 years which rose to 39.9 years in 2010. This shows that the aging population of Canada is increasing significantly over the years.

Figure 1: Age Distribution in Canada, 1971-2061 (Langlois, 2012).

The aging population puts the prosperity of Canada at risk because it causes a shortage of labour force. Aging population affects the decisions made by the government in terms of policy making and implementation. As a result, Canada lacks youthful generations to run the country’s political and economic activities. Aging population poses serious challenges to sustainability of Canada’s economy because it causes an increase of more aged people who are supported than younger people who could support the economy (Katsumata, 2000). According to the life-cycle income theory by Modigliani and Brumberg, people usually save at their early life stages in anticipation for retirement in future. When they grow old, they start using their savings and investments. In other words, people may not be able to contribute anything to the kitty of prosperity at old age. Therefore, the aging population poses a significant risk to the future prosperity of Canada. The country needs to identify the causes and effects of the challenge in order to develop long term solutions.

Causes and Impacts

Causes of Aging Population in Canada

One of the major causes of aging population in Canada is slower population growth. Like other developed countries, Canada is experiencing low population growth rate. CIA World Factbook (2015) suggests that the population growth rate of Canada in 2015 is 0.75%. Canada’s birth rate is also 10.28 births for every 1,000 population and the death rate is 8.42 deaths for every 1,000 population. This low population rate is a clear indication that the future generations will consist of aging population because only a few people are born annually. In fact, Statistics Canada (2015) suggests that by 2030 the number of deaths will be more than the number of births in a given year.

These low birth rates are caused by various factors. First, it is exacerbated by a decline in fertility rates in Canada (Langlois, 2012). The total fertility rate in Canada is 1.59 children born per woman, compared to 3 children or more in 1940s. In this case, the number of births is extremely low compared to the number of deaths. The new rate of fertility is far below the natural population replacement rate (Health Canada, 2002). Another reason for the low birth rate is women’s participation in the labour market. Women in Canada and other developed countries perform several duties outside the home, giving them little time to interact with their spouses and give birth to children. In other countries, women’s roles revolve around domestic chores and rearing children. Canadian women are more enlightened and spend most of their time performing economic activities. Education is also a significant cause reason for the low birth rates registered in Canada. Most Canadians have attained high education. In this regard, women spend a lot of time at school, and when they finally settle down they will be past the child-bearing age.

Increase in life expectancy of Canada’s population also leads to the growth of the aging population (Vieira, 2011). With the increasing efficiency of healthcare, the aging population is likely to live longer. As the birth of children declines, the aging population rises because death rates decrease as healthcare and sanitation improves. There was also a baby boom after the Second World War because soldiers and other men returned to their wives after a long time of war. The babies born at that time are now aging but a few children are born, causing an increased ratio of aging population to young people and a large aging population.

Aging population is also caused by migration of Canadian skilled workers to United States of America and other countries with better opportunities. Due to unemployment issues in Canada, qualified workers move to United States in search of employment opportunities. Apart from the skilled workers entering Canada from other countries as immigrants, there are several others who leave the country as migrants to United States. When situations become different in other countries and immigrants stop flowing in, the country will suffer net loss as people migrate to United States, causing brain drain and leaving aging population behind. The migrants to United States are mainly those who have higher education and higher income earners. When brain drain occurs, the unskilled workers who are left behind are not able to support the aging population adequately, adding to the misery of aging population in the country.

Impacts of Aging Population in Canada

The aging population in Canada has caused significant strain on national health and medical care. The aging population is often susceptible to diseases and injuries, causing the need for heath care provision. Instead of channeling their efforts in other economic benefits that could increase Canada’s prosperity, the government and local communities dedicate their efforts to providing healthcare for the aged population. According to Health Canada (2002), one among four aged people in Canada faces restrictions in their normal activities due to health problems. Furthermore, 80% of old people in Canada are affected by chronic diseases. The rate of injuries and deaths caused by injuries also increase with age. This limits their performance. Therefore, if the country relies on them due to the aging population then the economic prosperity of the country will decline significantly.

Due to the increasing health problems of the aging population, the demand for health services increase with age. Therefore, aging population in Canada will utilize health services more than young populations elsewhere in the world. By 2013, the government expenditure on health was the largest expense in its books, amounting to $27 billion (Public Health Agency of Canada, 2014). As the aging population problem persists, the government will spend even more money on healthcare. Considering the fact that the aging population contributes little efforts to economic development, there will be a deficit in the government’s budget as more money is used without more income being earned. Aged populations suffering from chronic diseases also require home health and social services which call for the participation of families and communities. This diverts efforts from economic prosperity to supporting the aging population. Therefore, aging population affects the prosperity of Canada by increasing budgets of healthcare services and diverting the efforts of stakeholders from economic development to support the aging population.

Moreover, aging population limits economic development because it causes low participation in the labor market. Aging generation is not active in the labor market. People usually become less productive as they advance in age. Young people are active in the economy because they have the energy and will to improve their income, invest, and save for their retirement. However, the situation in Canada is different because the unproductive aging population is larger than the active young population. The young people in Canada not only strive to invest and save for their lives, but also struggle to support the aging population which is not able to vend for its daily needs. Therefore, productivity in the labor market decreases and the causes a decline in the level of the country’s prosperity.

Furthermore, aging population affects the country’s prosperity due to its impacts on government finances and economic growth (Public Health Agency of Canada, 2014). Because the working population is smaller than the dependent population, the rate of productivity and economic growth is likely to decline in future. The aging workforce may also affect Canadian businesses because they are likely to produce small profits due to their less productivity. Labor shortages may also cause low productivity and profitability in the business sector, leading to decreasing economic growth. The government also spends a lot of money to fund health and support services for the aging populations in Canada.

Aging population also leads to low levels of education, skills and knowledge in Canada. These aspects are required in the labour market to enhance greater productivity, but Canada is disadvantaged due to limited education among the aging population.  According to Health Canada (2002), many people aged over 65 years have never finished high school. This lack of education makes Canada less competitive in the business world, leading to slow development and prosperity.


In order to solve the challenge of aging population and achieve greater prosperity, it is important for everybody in Canada to be aware of the problem. The government plays an important role in creating awareness. It may develop awareness programs intended to educate people in Canada about the issue of aging population, its effects and how it may be handled. Through the awareness programs, the government should advocate for increased young population that can provide the required labour, skills and knowledge needed to run the country economically and politically to achieve prosperity.

The young population working in Canada can be increased through several ways: increasing birth rates, increasing immigrations into Canada, and reducing migration to other countries (Vieira, 2011). In order to increase immigration into the country, the government needs to develop essential policies that result in creation of employment for people entering the country in search for jobs. The immigration policies should also be made less stringent so that it becomes easy for young people from third world countries to migrate into the country and participate in the labor market, leading to increased productivity and future prosperity of the country. Migration of young people from Canada to other countries should also be minimized by providing employment to skilled workers within the country. This can be achieved by providing a stable political environment and free markets where business people can exercise their freedom to innovate, improve their business profits, and be able to attract skilled workers.

Health Canada (2002) suggests that the problem of aging population can be solved by providing effective retirement benefits system whereby aging populations are guaranteed of minimum income upon retirement. This will ensure that the living standards of the aged people are not disrupted and they do not have to rely on the government for health service and support. Currently, people aged 65 years and above benefit from Old Age Security program which ensures that everyone aged 65 years and above gets some pension. This pension is adjusted for inflation, and covers even disability and death benefits. This system needs to be balanced across Canada and implemented successfully so that the aging population can benefit and become less dependent on younger generations. This system is important because it allows the government and the young population to focus on other areas instead of supporting the aging population. However, the aged people need to be educated on how to utilize and invest their pension so that it can cover them throughout the remaining years of their lives.

Another intervention mechanism is to increase the retirement age so that people who can work even after 65 years may participate in the labor market and improve the productivity and economic progress of the country (Vieira, 2011). This solution may lead to poor performance at the workplace, but the government may provide continuous education and training for aged people so that they can keep up with the changing technology, knowledge and skill needs.


Indeed, aging population is a serious problem that poses great risk to the prosperity of Canada. The median age of Canada has increased significantly over the past few decades, and the percentage of people aged 65 years and above is greater than that of people aged between 0 and15 years. This aging population increases the rate of dependence and reduces the number of participants in the labour market, causing increasing expenditure and decreasing income in the economy. This problem can be solved by implementing pension schemes effectively and in a balanced manner so that all aged people can improve their living standards and reduce their dependency levels. The government should also develop programs to increase employment for young people in Canada to avoid migration to other countries, and attract young immigrants into the country.


References List

Bakshi, G.S. and Chen, Z. “Baby Boom, Population Aging, and Capital Markets”. Journal of Business, 67, 2(1994): 165-202.

Employment and Social Development Canada. Canadians in Context – Aging Population, 2011. Web,

Health Canada. Canada’s Aging Population. Ottawa, Ontario: Ministry of Public Works and Government Services Canada, 2011. Print.

Katsumata, Y. The Impact of Population Decline and Population Aging in Japan from the Perspectives of Social and Labor Policy. New York: United Nations Secretariat, 2000. Print.

Langlois, M.C. Canada’s Aging Population: Impacts and Challenges. 2012. Web: Accessed August 1, 2015 from

Policy Horizons Canada. The Changing demographic structure, 2015. Web, Accessed July 31, 2015 from

Public Health Agency of Canada. The Chief Public Health Officer’s Report on the State of Public Health in Canada, 2014: Public Health in the Future, 2014. Web, Accessed August 1, 2015 from

Statistics Canada. Population growth in Canada, 2015. Web, Accessed July 31, 2015 from

Vieira, Paul. “Canada’s demographic time bomb”. Financial Post, 2011. Web. Accessed August 1, 2015 from


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