The hospital burden of intergenerational contact with the welfare system: A whole-of-population liked data study

Background: Intergenerational welfare contact (IWC) is a policy issue because of the personal and social costs of intergenerational disadvantage. We estimated the hospital burden of IWC for children aged 11-20 years. Methods: This linked data study of children born in South Australia, 1991-1995 (n=94,358), and their parent/s (n=143,814) used de-identified data from the Better Evidence Better Outcomes Linked Data platform. Using Australian Government Centrelink data, welfare contact (WC) was defined as parent/s receiving a means-tested welfare payment (low-income, unemployment, disability or caring) when children were aged 11-15, or children receiving payment at ages 16-20. IWC was WC occurring in both parent and child generations. Children were classified as: No WC, parent only WC, child only WC, or IWC. Hospitalisation rates and cumulative incidence were estimated by age and WC group. Findings: IWC affected 34.9% of children, who had the highest hospitalisation rate (133.5 per 1,000 person-years) compared to no WC (46.1 per 1,000 person-years), parent only WC (75.0 per 1,000 person-years), and child only WC (87.6 per 1,000 person-years). Of all IWC children, 43.0% experienced at least one hospitalisation between 11-20, frequently related to injury, mental health, and pregnancy. Interpretation: Children experiencing IWC represent a third of the population aged 11-20. Compared to children with parent-only WC, IWC children had 78% higher hospitalisation rates from age 11 to 20, accounting for over half of all hospitalisations in this age group. Frequent IWC hospitalisation causes were injuries, mental health, and pregnancy. Funding: Medical Research Future Fund, National Health and Medical Research Council, Westpac Scholars Trust.

Discounting and the Green Transition: District Heating in Denmark

Taking Aalborg as the basis for a case study, we consider the discount rates, annuity rates and costs of capital that were used in recent socio-economic and financial Net Present Value (NPV) analyses of a proposed geothermal district heating plant. While the core NPV analysis applied a real social discount rate of 4 percent, in keeping with Danish government guidance, emissions and electricity prices were based on costs of capital that differed from this rate, as did the annuity rate applied in the financial analysis of the project. While the different rates are carefully justified in each setting, we question whether there is consistency in the approach taken to intergenerational welfare across different steps of the analysis. The use of high corporate rates in some contexts potentially makes it more difficult for Green Transition projects to meet the legal requirement of being evaluated as socio-economically optimal.

The overlapping generations model

In discussing the life-cycle model, we focused on the individual-choice problem without taking into account the interaction between households, the production sector of the economy, and the government. In this chapter we take a broader perspective and embed the life-cycle model into a general equilibrium framework. In this framework, prices adjust in order to balance supply and demand in goods and factor markets and the government has to operate under some balanced-budget rules.As in the previous chapter, individuals save in order to smooth consumption over the life cycle. However now, individual savings behaviour endogenously determines the capital stock. This is the central difference from the static general equilibrium model discussed in Chapter 3. Since in our equilibrium framework we have to distinguish households within a given period according to their age or birth year, the models we study are called overlapping generations (OLG) models. In this chapter we introduce the most basic version of the OLG model and discuss the computation of a transition path and the intergenerational welfare effects of policy reforms. In Chapter 7 we extend this baseline model version in various directions. This subsection sketches the economic environment used in this chapter and Chapter 7. We describe the lifetime of people who inhabit the economy as well as their consumption decisions. Then we move on to the production side and the government structure. Finally, the equilibrium conditions for goods and factor markets which close the model are derived. Demographics As in Chapter 5 we assume that households in the model live for three periods. For simplicity we do not account for income and lifespan uncertainty. However, now in each successive period t a new cohort is born, where the number of households Nt in this cohort grows at a rate np,t, i.e. Nt = (1 + np,t)Nt−1. From Figure 6.1 one can understand why this demographic structure is called ‘overlapping generations’. In each period t a cohort Nt is born, but this ‘new’ cohort overlaps with the two cohorts Nt−1 and Nt−2 born in the previous two periods.