A recent analysis highlights that, in Brazil, individuals aged 65 and older have higher income than those of working age, revealing a generational economic conflict exacerbated by the current economic dynamics.
A recent post by Daniel Duque on the FGV Ibre blog has shed light on a peculiar economic trend in Brazil where individuals aged 65 and older earn more than those in the active workforce. This finding, supported by data from the Luxemburg Income Study, is not unique to Brazil as it has also been observed in France, raising concerns about a growing generational economic divide. Typically, retirees experience a drop in income due to pension systems that fail to replace 100% of pre-retirement wages and the fact that productivity gains in the active workforce are often not shared with retirees.
For Brazil, Duque’s calculations based on the National Household Sample Survey (PNAD) indicate that in 2024, the average income of those aged 65 and older will be 105% that of individuals in working age. In comparison, the income ratio in France is slightly lower at 101%. This trend reveals systemic issues within Brazil's pension system, which is characterized by one of the highest rates of pension value reallocation versus active income, leading to significant disparities between generations.
The implications of these findings are profound, suggesting that the lack of economic dynamism and productivity gains is contributing to a conflict over resource distribution between younger and older generations. Policymakers may need to address these disparities to ensure economic sustainability and intergenerational equity in the face of an aging population and stagnant economic growth.
