Generational transfers and the generational bargain

The paper suggests that the framework of a generational bargain is a potentially useful one for looking at important aspects of economic and social policies for both rich and poor countries. The bargain is that the working generation makes transfers of human capital to the young and consumption to the old on the understanding that other generations will behave in a similar way. The paper examines the stability of the bargain against ‘bad’ behaviour by particular generations; fractures in the generational cluster; and re-negotiation of the bargain.