Work and Well-being in an Aging Society

What policy, or set of policies, will most improve the economic well-being of Canadians? Because the aging of Canadian society will be a crucial part of the context of Canadian economic and social policy over the next few decades, this paper argues that the well-being of all Canadians is likely to be increased by policies that make it easier for individuals to smooth their labour supply more evenly over the life cycle. Greater smoothing of labour supply would have benefits for both younger and older cohorts, by implying both a less hectic middle-age and continued contribution, and involvement, by older Canadians. However, if a longer period of paid employment is to represent an improvement in individual well-being, it must be due to choice, not necessity. Hence, welfare improving policies to even out labour supply over the life cycle should be complemented by policies that help individuals even out the income fluctuations which they experience during their working lives. The perspective underlying this paper is the proposition that improving economic well-being is not necessarily the same as increasing Gross Domestic Product (GDP) per capita or maximizing the growth rate of GDP. GDP measures the marketed output of th