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AbstractDeclining fertility and rising life expectancy combined with migration are changing the demographic landscape of the MENA. Earlier high fertility will ensure a growing population in the next 20-30 years. Family structure is also changing: families are becoming smaller and increasingly nuclear, rather than extended. The region has to manage a young age structure and a gradual ageing of the population but with a potential weakening of the traditional inter-generational support based on family, it also faces a widely varying and heterogeneous resource base and socio-economic structure across the different countries. To maintain and improve inter-generational support within family and society in the MENA countries with large populations (such as Iran and Egypt) the most important challenges are poverty and vulnerability, unemployment, and development of long-term plans for an ageing population. These are inter-connected objectives since reducing poverty and increasing current employment could provide individuals and families with some resources to save and accumulate for old age. States in the region should put redistributive social policies in the areas of health, education and housing at the heart of a strategy of supporting family budgets and resources to assist them in their inter-generational care, but should also set up care and pension schemes to provide societal intergenerational support.

The age structure in many developing countries is changing—the population is ageing. There is increasing concern over the social and economic costs of caring for this ageing population, and the capacity of the state to finance the expected rising social expenditure has come to dominate the debate on the economics of population ageing. In this context the elderly are considered primarily as consumers and 'dependent' on the working population. Following the Keynesian and post‐Keynesian literature, this article argues that such a view of the elderly is incorrect, for several reasons. Firstly, empirical evidence shows that the aged do not consume (relative to their income) more than the rest of the population. Secondly, the issue of 'dependency' of the aged should be put in the broader context of the dependency of the unemployed and under‐employed in a market economy. Thirdly, the focus of the debate should move away from consumption and towards production; and finally, since the old make claims on the national output on the basis of their accumulated assets, savings and pensions, the distributional issues (with regard to assets as well as incomes) have to be an integral part of any pension system in order to alleviate poverty among the elderly.