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Demographics, technological change, participation rates, and Canada’s future labour shortage

Contrary to warnings about a growing unemployment problem, this essay highlights the potential for a growing scarcity of labour in Canada. Specifically, a slowing population growth rate and a declining labour force participation rate due to retiring baby boomers and an aging population will reduce labour force growth rates over the next few decades. Furthermore, historical experience suggests that technological change primarily alters the mix of employment while promoting faster economic growth, which also creates new jobs. Hence, it seems unlikely that technological change will result in a decline in the aggregate demand for labour. Indeed, rather than facing a future unemployment crisis, Canada is more likely to face a prolonged period of labour scarcity.