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

Gemma Abio, Concepció Patxot and Meritxell Solé, Universitat de Barcelona
Elisenda Rentería, Centre d’Estudis Demogràfics, Universitat Autònoma de Barcelona
Guadalupe Souto, Universitat Autònoma de Barcelona

In the course of their lifetime people consume, produce, save and share resources, and the activities they carry out vary significantly depending on the moment in their life cycle. In both childhood and old age, personal consumption needs exceed those that could be covered by any economic activity, while resources are only produced during working age. In order to meet the needs and guarantee the well-being of the entire population, transfers of resources between generations are essential. To this end, societies organise intergenerational transfers of resources through families and the public sector. This organisation varies depending on the development of the welfare state in each country and is conditioned by the economic, social and demographic changes that take place in society.
Key points
  • 1
       During 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.
  • 2
       To 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).
  • 3
       Depending 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.
  • 4
       Paid 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.
Consumption needs and ability to earn labour income vary over people’s life cycle

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.

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Autores

Gemma Abio, Concepció Patxot and Meritxell Solé , Universitat de Barcelona
Elisenda Rentería , Centre d’Estudis Demogràfics, Universitat Autònoma de Barcelona
Guadalupe Souto , Universitat Autònoma de Barcelona

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