Public Debt, Welfare Reforms, and Intergenerational Distribution of Tax Burdens in Denmark

This paper assesses the generational stance of fiscal policy in Denmark. The results suggest that if current fiscal policy remains unchanged, the growth-adjusted lifetime net tax payments of future generations would be about 50 per cent higher than those paid by current newborns. It is found that a complete elimination of this imbalance would require a cut in all transfer payments (or a rise in all taxes) of almost 5 per cent. Inspired by themes in the current debate on fiscal policy, the paper finally tries to quantify the generational impact of programmes for public debt reduction, labor market reforms to reduce structural unemployment and initiatives to raise the retirement age.