Across the developed world, generous welfare state programs for the elderly, together with projected doublings or more in the proportion old, have led to political struggles that sometimes pit younger generations against the elderly. The goal of this blog is to put the current situation in historical and institutional context.
the direction of intergenerational transfers in the population has shifted from downward to upward, at least in a few leading rich nations. This sea change has resulted in part from the changing economic role of the elderly, which is closely tied to the rise of the welfare state and the increasing importance of assets, and in part from population aging brought about by the demographic
Despite the change in the net direction of resource flows, investment in health and education per child has risen relative to incomes, in association with fertility decline.
The degree to which these changes have occurred varies across levels of economic development, broad regions of the world, and the idiosyncratic institutions of particular countries. It is well known, however, that the systems of public transfers to the elderly as currently structured will not be fiscally sustainable as populations continue to age rapidly in the first half of the twenty-first century. Structural reforms will occur and in some cases have already been made, and the outcome is likely to be a reversal in the trend toward earlier retirement and related changes.