Demographic changes and intergenerational reallocations in Brazil, 2003–2018

This research explores the intergenerational distribution of income and consumption in the context of the global demographic transition, focusing on Brazil. While traditional national accounts measure production and consumption, the impact of population growth and aging on the overall economy is not immediately apparent. Using National Transfer Accounts based on the United Nations (2013) methodology, we examine the disparity between consumption and labor income across generations in 2003 and 2018, focusing on the growth decomposition of the national transfer accounts. In general, the labor income of the working-age population supports the consumption of those with lower or no labor income, such as children and older individuals. However, our findings reveal that total labor income falls short of covering all consumption, leading to a growing lifecycle deficit over time. Despite the positive impact of the demographic bonus on public revenues, tax collections have proven inadequate to cover public transfers, particularly in recent years. The study suggests that investing in education may be a promising public policy for a future scenario without a demographic bonus and in an aging society. Such investment can enhance labor market productivity, increase labor income, and mitigate the impact of a lower proportion of the working-age population.