The political economy of changes in family and old‐age welfare policy spending: Analysis of OECD countries, 1998–2011

Abstract

This study investigated whether in times of budget constraints and in countries with relatively large family policy spending, family policy has an advantage in the budget competition with old‐age expenditures, compared with countries with a lower level of family policy spending. We employed pooled time‐series cross‐sectional analysis of 24 OECD countries from 1998 to 2011. Our findings suggest that the initial level of family spending tends to moderate the crowding‐out effect of old‐age spending, indicating that the more mature a family spending policy is, the more it resists budget competition from old‐age policy. Furthermore, the size of government debt was found to have an insignificant effect on welfare budgeting. Our findings indicate that retrenchment in welfare spending for old age cannot be fully explained by budget constraints. Politics among interest groups associated with different welfare programmes can be an important determinant in explaining changes in spending on each welfare programme.

Ageing and the economy: a literature review of political and policy mechanisms

“…Bonoli and Reber (2010) using a panel of OECD countries, and Rattsø and Sørensen (2010) using Norwegian local data, both find evidence of crowding out: higher spending on elderly is associated with lower support for spending on childcare and schooling. Baek, Ryu, and Lee (2017) argue that such trade-offs between family and old age spending are more likely when family policies are less mature and entrenched. One potential complication when attempting to extrapolate from such analyses is that if an increase in the elderly population is associated with a decline in the child population rather than a decline in the working age adult population, a decrease in overall spending is still compatible with constant, or even increasing spending per child (Kurban, Gallagher, and Persky 2015).…”

At the heart of the Nordic occupational welfare model: Occupational welfare trajectories in Sweden and Denmark

“…Pension policy is often seen as an area with strong path-dependency, although, due to demographic changes and economic pressure, it is also an area for reforms in many welfare states (Baek, Ryu, & Lee, 2016).…”