Generations at war or sustainable social policy in aging societies?

This paper argues that debate about generations and equity will grow in importance, as population age structures evolve. This will warrant further scientific inquiries. It is also likely to require new policies, or changes in the design of current welfare policies.

The authors state that although life-cycle considerations have been essential for welfare state policy designs, they have attracted less attention within political theory. The shortcomings of both classical liberalism and Marxism relate to their lack of a lifecycle perspective. In this context, they suggest that Economist Gunnar Myrdals’ arguments in the 1930's for welfare state policies as a response to demographic challenges can also guide policy-making in the twenty-first century.

The balance in existing intergenerational transfer systems is upset by demographic change and requires specific policy adaptation. This is well understood even if not always acted upon. In the area of pension systems it has evoked fears of generational warfare. Yet there is very little evidence that selfish pensioners will aggressively vote for their own enrichment at the expense of the younger population. The debate has been most intense in the US, which in other respects is surprising since a sober assessment suggests that the population structure is and will remain rather well balanced. This is in sharp contrast to several European nations, especially the Mediterranean countries, where fertility has reached historically unprecedented low levels, close to half of what is required to reproduce the population.

This suggests that a broader approach is needed to sustainability in social policy, focusing not only on the pension systems but also on family formation and education.

The authors conclude that a balanced population growth would reduce the distributive tensions between generations. It would also be welfare enhancing for individual citizens, since it would mean that people would actually give birth to the number of children they would like to. In a European context, this is likely to require substantial public intervention in the form of redistributive policies in favour of families with children and a different division of the burden of reproductive work in gender terms. There are other policy options that should be part of a future-oriented approach to changing population structures. To invest in human capital and to use migration as a way of increasing the labour force are good examples of policies for the future that will require substantial public intervention. Such policies boil down to increasing the number of future taxpayers and their productivity. [adapted from authors]