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Policy Brief

Who Pays for Demographic Change?

Public Finances and Intergenerational Transfers

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.