The generational economy

By | October 13, 2019

Economic activities of individuals are closely related to their demographic characteristics such as age, gender and parental status. For example, in European countries, labour income is generated mainly by the population from age 20 to about age 60. Despite their low labour income, persons below age 20 and older than 60 are characterised by high consumption levels, with publicly financed education and health consumption as important components.

Labour income is concentrated at age 20-60. Nevertheless, children and elderly persons account for a large part of total consumption.

The combination of low production and high consumption in childhood and old age requires the reallocation of economic resources between generations and across life stages. The needs of children are mainly covered through intra-family transfers from the parents. The retired elderly population finance their needs by public transfers and by using their assets and asset income.

Public transfers are mainly directed at the elderly population, private transfers mainly at children.

The term generational economy1 refers to the generational and gender-patterns of production, consumption and saving and to the mechanisms and the patterns of reallocating resources between generations, life stages and genders.

Research on the generational economy aims at a better understanding of the relation between demography and the economy, both at the macro-level as well as at the level of households and individuals.

The webpage presents and summarizes research and data on the generational economy in Europe. It is maintained by researchers at the Vienna Institute of Demography and focuses on research in the context of National Transfer Accounts.

1 The term generational economy was introduced by Lee & Mason (2011) in Population aging and the generational economy: A global perspective.