Intergenerational equity as a guarantee of social well-being
Transfers of resources between generations allow people’s needs to be met throughout their life cycle
1During their active age individuals generate a surplus in relation to resources, whereas in the stages of childhood and old age consumption needs prevail; this is known as the life cycle deficit.
2To finance this deficit, the main resource reallocation mechanisms come from families (who directly undertake the financing of the needs of their children and, in part, those of their elders) and the public sector (as regards pensions, unemployment, health and education).
3Depending on the development of the welfare state in different countries, transfers of resources are organised differently. In countries where more taxes are paid, children and the elderly receive more resources.
4Paid work aside, resources are also produced through household work and long-term care of children and parents. This type of work is done to a larger extent by women.
Until they are incorporated into the labour market, children’s needs are met through the economic resources provided directly by families and by society as a whole. In the active life of the population more resources are produced, through labour income, than are consumed, and these resources serve to cover the costs of the needs of other generations. On reaching old age, the elderly cease to carry out economically productive activities and their consumption needs are financed by transfers of resources from the public sector and their families.