Essays on Population Economics, the Economics of Population Aging and Health Economics

The three chapters of this dissertation analyze topics within the realm of population economics, the economics of population aging and health economics. Chapter 1: Between 1990 and 2019 Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, and Saskatchewan passed or amended legislation allowing physicians to split income with family members via Canadian-Controlled Private Corporations; three provinces (Alberta, British Columbia and New Brunswick) allowed for this before 1990 (we exclude Prince Edward Island and the three territories). For some, there are large financial benefits from income splitting which can exceed $50,000 CAD per year. We use a difference-in-differences model to estimate the effect of not allowing physicians to split income on the net interprovincial migration of physicians to provinces that enacted income splitting rules after 1990. The annual net migration flow to these provinces increases on average by 21% lower when they allow for income splitting compared to when they did not. This equates to nearly 0.3% of the average physician workforce per year. Our results have implications for economic policy and provide information about the utility functions of physicians: it is suboptimal if Canadian provinces design legislation/policy with the intention of poaching physicians from one another; and physicians impose a large cost onto their former healthcare systems and patients when they migrate. Presumably, for those who move as a result of the policy (the increase in the flow), the utility derived from income splitting’s financial benefit outweighs the value of such costs in the physicians’ utility function. Chapter 2: I contribute to the political economy and cost-benefit analysis literatures pertaining to Covid-19 public health measures (PHMs). Specifically, I address how individuals’ net-present-value (NPV) of these policies varies with age across the Canadian population, and how that variation influences the political economy of the PHMs. Deaths per 100k persons from Covid-19 vary markedly across jurisdictions within the USA and Canada, as well as between these two countries. The USA had nearly three times more deaths per capita than Canada – partially due to stricter and better respected PHMs in most Canadian provinces than in most American states. Significant economic costs are associated with these PHMs; and a broad body of literature exists to measure the macro and microeconomic implications of these policies. It is also clear that mortality due to Covid-19 strongly depends on age. Bergstrom and Hartman’s (2008) framework, which employs population projections and lifetables to estimate the political support for public pension reform, is adapted to this context. Assuming individuals’ support for PHMs depends on their expected personal NPV, then the benefits of PHMs are the expected value of life-years saved from not contracting the Covid-19 virus and the costs account for the expected lost income due to the unemployment caused by the PHMs as well as the value of forgone consumption/leisure. From an individualistic perspective, the results indicate the majority of Canadians should support the Covid-19 PHMs. Chapter 3: I explore the possibility that population aging is contributing to slower economic growth through changes in household consumption decisions. I estimate, empirically, the relationship between the basket of goods consumed by aggregate households and their median age. Recently, Cravino, Levchenko and Rojas (2022) analyzed data from the United States and found a positive relationship between the age of households and the share of consumption they dedicate to services. Using household consumption data on 12 countries - which includes both developing and developed nations - the relationship between the fraction of household consumption attributed to services and the Old Age Dependency Ratio (OADR) is estimated. Conditional on GDP per capita, I observed that households consume a larger share of services as the population OADR increases. The additional expenditure is concentrated on hospitality and restaurants, and to a lesser extent, transportation and privately obtained health care.

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