Intergenerational transfers

In partnership with the International Center on Aging (CENIE), a project promoted by the University of Salamanca and co-financed by INTERREG (Interregional Cooperation Program between Portugal and Spain, European Regional Development Fund), the Institute of Public Policy developed the project Demographic changes and intergenerational transfers in Portugal, whose main objective is the study of transfers between generations in Portugal and their evolution during the second half of the 20th century to the present.

Cross-generational transfers occur because there are life stages in which we consume more than we produce (childhood and old age) and we need transfer streams from productive age groups in order to maintain our well-being. These flows are produced through governments (public transfers such as taxes or pensions), households (private consumption, private education, housing, etc.), or through capital markets (savings, interest payments of a loan). The distribution of resources between each of them will largely depend on political or institutional issues, but also demographic, and varies over time.

This project intended to estimate transference profiles by age for different years in order to analyze how their changes in time interact with demographic factors in the political and economic context. In Portugal, this type of analysis is especially interesting given ageing population, and it is possible to observe, in the long term, how different political changes influenced the distribution of resources of different age groups.

From this analysis, valuable lessons were earned to understand the determinants of the well-being of individuals, especially those in situations dependent on other age groups. The analysis is also useful to analyze the sustainability of the welfare state in different economic situations and how public policies can respond to this situation.

It is this study of transfers and redistribution of financial assets that allows us to know the origin of the well-being of each age group and to understand how changes in the economy or social protection policies can affect each group. The study of transfers also allows us to understand how changes in age structure can have an impact on the aggregate distribution of these transfers, and thus, on the economy.