The impact of aging on labour market participation rates

Since 2007 (prior to the economic downturn of 2008/2009) the overall labour force participation of Canadians declined by about two percentage points. The first part of the study investigates the extent to which aging affected changes in labour market participation rates since 2007, based on data from the Labour Force Survey (LFS). In the second part, the reasons behind the increase in the participation rates of Canadians aged 55 and over, which have been trending upwards since 1996, are explored. In 2016, individuals aged 55 and over accounted for 36% of the working-age population, the highest proportion on record (since the compilation of comparable statistics in 1976). By 2026, that proportion could reach 40%. Because labour market participation starts to decline after age 55, population aging was the main factor behind the decline in the overall participation rate in the years following the recession. At the same time, the labour market participation of older Canadians increased. From 1996 to 2016, the labour force participation rate of individuals aged 55 and over increased from 24% to 38%, reaching a record high in 2016. The participation rate of individuals aged 55 and over increased for all levels of education. For instance, the participation rate of those with a high school diploma or less increased from 19% in 1996 to 29% in 2016. Changes in age, family structure and educational factors explained 44% of the increase in the labour market participation of older Canadians from 1996 to 2016.