Acta academica karviniensia 2020, 20(2):65-75 | DOI: 10.25142/aak.2020.010

ASSESSING THE INTERGENERATIONAL VALUE TRANSFERS: A LONG-TERM APPROACH CONSIDERING POPULATION AGEING IN THE CZECH REPUBLIC

Richard Šmilňák

Moravian Business College Olomouc, tř. Kosmonautů 1288/1, 779 00 Olomouc

University of Economics, Prague, Nám W. Churchilla 1938/4, 130 67 Praha 3 - Žižkov

With the ongoing reversal of the population pyramid in the foreground, this paper designs a framework for assessing the intergenerational redistribution due to collective pension, healthcare, and education system funding in the Czech Republic. Employing the generational accounting method for locking the fiscal policy in the base year and deriving individual lifetime net tax payments, overall generational contributions are calculated. This work sheds light on who benefits from and who loses out in the 2015 calibration of the system. The losses are expected for those currently young or yet unborn. The increasing aged dependency ratio puts pressure on the productive population as well as on public finance which results in considerable value transfers from young generations to their predecessors. Such scheme levies – through tax implications of dependency – a high burden of contribution on the population which will be productive especially around the time forty years from now.

Keywords: generational accounting, public finance, retirement pensions, value transfers.

JEL classification: H51, H55, H6, J11

Received: October 1, 2020; Revised: January 11, 2021; Accepted: January 27, 2021; Published: January 28, 2021  Show citation