Pro-elderly welfare states within child-oriented societies

Abstract

Households and policies are the main vehicles of intergenerational transfers. Working-age people are net contributors; children and older persons net beneficiaries. However, there is an asymmetry in socialization. Working-age people pay taxes and social security contributions to institutionalize care for older persons as a generation, but invest private resources to raise their own children, often with large social returns. This results in asymmetric statistical visibility. Elderly transfers are near-fully observed in National Accounts; those to children much less. Analysing ten European societies, we employ National Transfer Accounts to include public and private transfers and National Time Transfer Accounts to value unpaid household labour. All three channels combined, children receive more per capita resources (73 percent of prime-age labour income) than older persons (31 percent). Europe is a continent of pro-elderly welfare states and strongly child-oriented parents. Since children are public goods, why has investment in them not been socialized more?

Social Investment and Youth Labor Market Participation

“…Moreover, in line with the analysis of Bruno, Marelli, and Signorelli (), our results suggest that youth labor market indicators are less responsive to variation in compensatory spending as the total effects of a shock in these policy variables do not ultimately lead to an increased participation of the youth in the labor market. These results also highlight the importance of explicitly considering the role of intrafamilial transfers in future analysis as social investments may have a differential impact across childhood and early youth through family investments (Gál, Vanhuysse, and Vargha , Francesconi and Heckman ). At the same time, we need to be cautious as we did not consider any redistributive/differential effect that such policies can have at the individual levels (Bonoli and Liechti ; Pavolini and Van Lancker ), nor any regional spillover effects that policies can have among regions.…”

“…This result is in line with the analysis of Bruno, Marelli, and Signorelli () who found that both NEETs and unemployment rates respond slowly to an increase in GDP, with many years elapsing before the situation of the young improves. In addition, as recent studies on intrafamilial transfers suggest (Gál, Vanhuysse, and Vargha , Francesconi and Heckman ), there is a danger in looking at data on public transfer alone without considering intergenerational transfers (cash) and the household economy (time), as social investments may have a differential impact across childhood and early youth through family investments.…”

“…Indeed, the recent “Youth Guarantee” program targeting all the young people under 25 years in Europe is implemented at a regional level. Moreover, these regional indicators will allow us to (indirectly) take into account the important role of intrafamily transfers as suggested by recent studies (Gál, Vanhuysse, and Vargha , Francesconi and Heckman ).…”

Government Transfers to Parents and Population Policy in a Global Perspective: An Economic Demographic Perspective

“…The importance of socialisation of childcare will be equally important in a world with a rapidly shrinking population and where negative global population growth has a negative impact on the well-being of the population. In a scenario where population growth is a positive externality, a society might wish to instead increase the extent of socialisation of childbearing for the benefit of future generations (for example, Gál, Vanhuysse, & Vargha, 2018).…”

Welfare states as lifecycle redistribution machines: Decomposing the roles of age and socio-economic status shows that European tax-and-benefit systems primarily redistribute across age groups

“…Welfare state societies specifically solve it through the inter-age-group resource transfers of the piggy bank in cross-section: surplus resources are taxed away from the working-aged to finance childhood and old age. European welfare societies engage in a division of labor to solve the problem: they are elderly-oriented welfare states relying on strongly child-oriented families [ 67 – 69 ]. Our general result obtains everywhere, even though there are country-specific differences within Europe as can be expected.…”