Intergenerational economic transfers in the period of rapid population aging: the case of Slovenia
Joze Sambt, University of Ljubljana
Janez Malacic, University of Ljubljana
The human being is a creature that needs help from other older humans for an extended period of time in the early stage of life to survive. For older individuals, this is not necessary in all cases, as some people work and take care of themselves through the end of their life. However, the production of older people is not enough to cover their consumption. Economic flows across age groups cover the elderly’s excess consumption over their labor income. Age is becoming an increasingly important dimension because of the aging of the population, which is causing profound changes in the age structure of the population. Age is the most important attribute of determining people’s economic behavior. In the past several years, the National Transfer Accounts (NTA) methodology has been developed which adds the age dimension to the System of National Accounts (SNA). In this paper, we present the latest NTA results for Slovenia and build further analyses on them. We analyze long-term sustainability of the Slovenian public system. We focus on various government measures to limit growing public expenditures revealed in the analysis as a consequence of rapid population aging. However, under various government measures the distribution of burdens among cohorts differs, especially if we introduce the time dimension into the analysis. The results we found are in line with the elderly’s aspirations to delay cuts in old-age benefits for as long as possible. Among measures for improving long term sustainability of the public system the elderly prefer increasing age at retirement and tax increases, especially on labor, over reducing old-age benefits. However, this shifts burdens to younger generations and generations to come.