Due to decreasing birth and mortality rates, aging has become a global trend. Economic theories predict that age influences individuals’ saving and consumption behavior. Existing studies found that there was a U-shaped relationship between consumption and age in the United State, consistent with the life-cycle hypothesis. In this paper, we investigate the relationship between population age structure and aggregate consumption in Canada using a province-level panel data set from 1983 to 2015. Results show that while the impacts of age structure on the consumption of nondurable goods and service are insignificant, the impacts on consumption of durable goods are significant. Furthermore, consistent with the literature, prime age people consume less than younger and old people do. With an aging population, the number of prime age people decreases over time in Canada. The implication of this research is that aggregate consumption of durable goods will increase over time in Canada.
Aging, Age distribution, Life-cycle Hypothesis, Consumption, Durable Goods, Non-durable Goods, Canada.