Who Pays for Demographic Change?

Key messages:

• Economic consequences of population ageing are not just determined by demographic change, but to a large extent by the characteristics of the economic life cycle.

• The concept of the life cycle deficit provides a new way to measure dependency based on the difference between age-specific consumption and production.

• Maintaining the fiscal sustainability of the public transfer systems in many European countries requires a rethinking of the average economic life cycle.

• Political reforms need to take into account not only public transfers, but also private transfers, particularly those in the form of services to other household members through unpaid work.

References:

• Bengtsson, T. and K. Scott (2011): Population Ageing and the Future of the Welfare State: The Example of Sweden, In: Population and Development Review 37 (Supplement): 158-170.

• Gál, R. I. (2015): The Measurement of Intergenerational Economic Flows – National Transfer Accounts (NTA), Presentation at the Population Europe Event “Who Pays for Demographic Change? Public Finances and Intergenerational Transfers”, Brussels, 27.01.15.

• Gál, R. I., Szabó, E. and L. Vargha (2015): The Age-Profile of Invisible Transfers: The True Size of Asymmetry in Inter-Age Reallocations, In: The Journal of the Economics of Ageing 5: 98-104.

• Hammer, B., Prskawetz, A. and I. Freund (2015): Production Activities and Economic Dependency by Age and Gender in Europe: A Cross-Country Comparison, In: The Journal of the Economics of Ageing 5: 86-97.

• Lee, R. and A. Mason (2011) (eds.): Population Ageing and the Generational Economy: A Global Perspective, Cheltenham: Edward Elgar Publishing.

• Mason, A. and R. Lee (2006): Transfers, Capital, and Consumption Over the Demographic Transition, In: Clark, R., Mason, A. and N. Ogawa (eds.): “Population Aging, Intergenerational Transfers and the Macroeconomy”, Northampton, MA: Edward Elgar: 128-162.