The chair, a partnership between CIRANO, Retraite Québec, iA Financial Group and the universities that began in 2014, originally had the name Industrial Alliance Research Chair on the Economics of Demographic Change. Entering a second five-year term in 2019, the Chair continues its work thanks to the renewal of its collaboration with the CIRANO, Retraite Québec, UQAM and HEC Montréal.

Chairholders Raquel Fonseca (ESG UQAM) and Pierre-Carl Michaud (HEC Montréal) take the opportunity to strategically reposition the Chair and adopt a new title, namely, Research Chair in Intergenerational Economics. Preserving the same DNA, the work of the Chair is organized around 3 axes – retirement and savings, health, labour market – identified as priorities and transversal to the intergenerational economic issues of demographic transitions.

The Chair contributes to advancing scientific knowledge and providing decision-makers with insightful analyses of the intergenerational economic issues related to demographic change.

Expertise | Relevance | Ethics | Collaboration

Under the co-supervision of professors Raquel Fonseca de ESG UQAM and Pierre-Carl Michaud of HEC Montréal, the work of the Chair relies on the expertise of several professors whose work in public economy, human resource economics, and economics of aging and health is recognized worldwide for their rigour and relevance.

The research program of the Chair is based notably on simulation models built by the team to analyze, over several decades, the distribution of living conditions and certain behaviors of individuals. These models offer, over time, the possibility of prospectively simulating the sensitivity of different economic policies and macroeconomic and demographic conditions. This unique expertise makes it possible to understand and project the behavior of families and individuals in an economically coherent manner and to understand the effects on private and social well-being.

Issues
Retirement and savings issues are at the heart of intergenerational economic issues linked to demographic changes.

Personal finance management is currently carried out in a particularly uncertain economic environment in which financial returns have been historically low. Everything suggests that this environment will continue for the next few years. Personal savings and investment decisions are also taken in a more complex regulatory framework than before. Retirement funds provide less and less of the fixed benefits at retirement and operate more on the basis of fixed contributions and variable benefits. The complementarity and attractiveness of retirement savings vehicles such as RRSPs, TFSAs, RESPs and the new VRSPs are often misunderstood by savers, which leads to suboptimal savings behaviours, especially when taking into account taxation and income support programs.

The chair intends to promote this pole of expertise, by tackling several important issues from a behavioural perspective, the aim being to better understand in order to act better.

Examples of Actions
The team will look for example at:

  • The optimality of the year in which benefits from the QPP begin, knowing that more than 50% of Quebecers apply for their retirement pension at age 60;
  • The value and role of financial advice;
  • Disbursement products at retirement to analyze the behaviour of households in relation to annuities, long-term care insurance and reverse mortgages;
  • The comparison between the choice of savings portfolio of Quebec and Ontario taxpayers according to their socio-demographic characteristics and their level of income;
  • Evaluating interventions that can help households improve their financial literacy and make better savings and retirement decisions. This work, carried out jointly with the Retirement and Savings Institute at HEC Montréal, will allow us to study interventions aimed at improving the profitability of choices;
  • Developing means to help individuals choose between different savings vehicles or make better disbursement decisions.

Issues
The chair has programming on health issues, essential to analyze and document in the context of an aging population.

Examples of Actions
The team will look for example at:

  • The improvement of the COMPAS model using recent RAMQ data. The consumption of drugs as well as the services obtained outside hospitals will be research priorities;
  • The determinants of rising costs in the health system. Since the RAMQ data cover a fairly long period (1994-2016), it will make it possible to analyze the effects of volume, prices and composition (aging);
  • Evaluating using COMPAS, but also using administrative data, the impacts of various formulas of an autonomy insurance plan in Quebec;
  • The study of the determinants of health, notably education, using census data linked to the tax and mortality files. This data can be used for a variety of purposes, including projecting changes in mortality, but also to integrate these effects on mortality into the study of public policy.
Issues
For several decades there has been a flattening of distribution of wages depending on age in more developed economies. Recent cohorts have seen less wage growth as they get older compared to previous cohorts. The implications of this phenomenon are numerous: it affects, for example, the degree of measurable wage inequality from cross-sectional data as well as long-term intergenerational income inequalities.

Examples of Actions
The chair team, looking at inequality, will study:

  • The links between technological advances and human capital to explain the current and future transformations within the labour market as well as the age-wage profiles. The team will be particularly interested in the structural and cross-sectional decomposition of wage inequalities. It will also analyze wage inequalities and their interactions with demographic projections;
  • The issue related to the labour market participation rate, which since 2007 in Canada has dropped by 2% while the participation rate of individuals over 55 has increased since 1995. The team proposes to analyze the distinction between cyclical effect and demographic trend;
  • Older age entrepreneurship, growing among young retirees, asking in particular whether governments can further increase self-employment rates among older workers – and more generally, if and how the institutional and socio-demographic structure of one country influences trends in self-employed works in self-employment;
  • The integration into employment of people with disabilities, a major participation and retention issue in the labour market. It will pay particular attention to the problems of scarcity in the quantity and quality of labour which are likely to worsen in the context of an aging population;
  • The rate of return of education and continuing training, in a context where technological change, increased international competition and changes in the population’s consumption baskets require a workforce capable of adjusting quickly to the impacts experienced;
  • The role of public policies in relation to the scarcity of labour, such as the guaranteed minimum income, or the international strategies of attracting highly qualified labour in a context of technological change and aging population;
  • Forward-looking scenarios aimed at better responding to the challenges of an aging population, through the use of long-term simulation models, SIMUL and COMPAS.
Measure # 1: Analyze and document the prospective effect of demographic transitions on the community in relation to the standard of living, health of the population as well as on private and public finances in Quebec and Canada.

Measure # 2: Understand the impact of demographic transitions on individual work-related, retirement and saving behaviors and on the use of health care and long-term care.

Measure # 1: Analyze public as well as private policies and programs that can mitigate the adverse effects of demographic changes and ensure the quality of life of Quebecers and Canadians.

Measure # 2: Evaluate the opportunity cost of public spending choices in key state missions, including health, education, family, and immigration to better quantify their interests while taking into account fiscal and economic constraints

Measure # 1: Collaborate with stakeholders in the scientific community and the public and private sectors.

Measure # 2: Organize, participate in and nurture various types of academic, public and media activities for the transfer and dissemination of knowledge.

Measure # 3: Provide partners/collaborators with technical tools as well as training to facilitate their use.

Measure # 1: Train graduate students in the analysis of economic behavior, standard of living, health, and personal and public finances.

Measure # 2: Support students during their program through job opportunities at the Chair or internships, as well as a mentoring approach to foster their socio-professional integration into the labor market.