, Volume 40, Issue 3, pp 541–560 | Cite as

The public reallocation of resources across age: a comparison of Austria and Sweden

  • Bernhard HammerEmail author
  • Alexia Prskawetz
Original Paper


There is a strong interdependency between public transfers and the shape of the economic lifecycle because these transfers facilitate and enable the decoupling of production and consumption over long time periods, most notably in childhood and retirement. The design of public transfers obviously influences the production and consumption and consequently also the degree of economic dependency of children and the elderly. We propose economic dependency ratios which are based on age-specific consumption and labour income or age-specific public contributions/benefits, respectively, illustrating them in a comparison of Austria and Sweden. Although these two countries are very similar economies in terms of production, income and the size of the public sector, there are remarkable differences in the design of public transfers, in their distribution over age-groups and consequently in the shape of the average economic lifecycle. Using the economic dependency ratios we show that the financial sustainability of the public transfer system depends beside the demographic developments strongly on its design: the Swedish system collects the contributions from a wider range of age groups, transfers a smaller share to the elderly and provides more support to younger generations, supporting them to invest in children of their own. These characteristics have a positive effect on the sustainability of the Swedish system: although in Sweden there is a larger share of the population in the age group 60+, the total economic dependency of elderly persons is lower.


Economic lifecycle Economic dependency ratio National Transfer Accounts 



This work was supported by the Austrian Science Fund (Project I 347-G16 “National Transfer Accounts and intergenerational redistribution in European institutional settings”) and by the Vienna Chamber of Commerce (Wirtschaftskammerpreis 2011). We also thank Werner Richter for the English proof reading.


  1. Cutler D, Poterba J, Sheiner L, Summers L, Akerlof G (1990) An aging society: opportunity or challenge? Brookings Pap Econ Act 1:1–73CrossRefGoogle Scholar
  2. European Commission and Economic Policy Committee (2011) The 2012 Ageing Report: Economic and budgetary projections for the 27 EU member states (2010-2060). J Eur Econ 2/2012Google Scholar
  3. European Communities (2008) European price statistics: an overviewGoogle Scholar
  4. Forsell C, Hallberg D, Lindh T, Öberg G (2008) Intergenerational public and private sector redistribution in Sweden 2003. Institute for Futures Studies, StockholmGoogle Scholar
  5. Lee R, Mason A (eds) (2011) Population aging and the generational economy: a global perspective. Edward Elgar Publishing, CheltenhamGoogle Scholar
  6. OECD (2011) Pensions at a glance 2011: retirement-income systems in OECD and G20 countries. OECD Publishing, ParisGoogle Scholar
  7. Sambt J, Prskawetz A (2011) National transfer accounts for Austria: low levels of education and the generosity of the social security system. In: Lee R, Mason A (eds) Population aging and the generational economy: a global perspective, Edward Elgar Publishing, Celtenham, pp 256–268Google Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Institute of Mathematical Methods in EconomicsVienna University of TechnologyViennaAustria
  2. 2.Vienna Institute of DemographyAustrian Academy of ScienceViennaAustria
  3. 3.Wittgenstein Centre for Demography and Global Human CapitalViennaAustria

Personalised recommendations