Abstract WP09-05

Lee, Ronald, and Andrew Mason. 2009. New perspectives from National Transfer Accounts for national fiscal policy, social programs, and family transfers. Paper prepared for the Expert Group Meeting on Population Ageing, Intergenerational Transfers and Social Protection, Santiago, Chile, 20-21 October 2009.

Introduction: The generational economy consists of institutions and economic mechanisms that are employed to shift economic resources across age groups or generations. The generational economy is important because the timing of consumption over our lives differs from the timing of what we produce through our labor. In all human societies, past and present, children depend heavily on resources generated by working adults. And in all contemporary societies, those who are old depend on flows that originate during the prime working ages.

Key features of the generational economy are changing in important and inter-related ways. First, the economic lifecycle, the balance between what is consumed and what is produced through our labor, is changing over time and as economies develop. Second, the reallocation systems are changing. The third important change in the generational economy can be traced to the global transition in population age structure. One of the important points that will emerge below is that changes in population age structure have enormous effects on the generational economy. Changes in population age structure are leading to changes in the direction of intergenerational transfers and they are straining the systems that are so important to the generational economy.

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