Pro-elderly welfare states within child-oriented societies

ABSTRACT

Families and policies both are 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 transfer channels combined, children receive more than twice as many per-capita resources as older persons. Europe is a continent of elderly-oriented welfare states and strongly child-oriented parents. Since children are ever-scarcer public goods in aging societies, why has investment in them not been socialized more?

KEYWORDS:

• Children-as-public-goods
• household economy
• intergenerational transfers
• National Transfer Accounts
• parental investment
• social under-investment

Acknowledgements

We are grateful for comments from the editors, Kati Kuitto, Birgit Pfau-Effinger, Martin Schröder and seminar participants at the Max Planck Centre Odense, the Madrid FUNCAS workshop, Hamburg, Lausanne, Konstanz, and Pazmany Budapest universities, the Hebrew University Jerusalem, the Slovak Academy, and the Canadian Parliament. Gal is grateful for hospitality at Hitotsubashi University’s Institute of Economic Research. We thank the following teams for providing NTA data: Bernhard Hammer (Austria), Reijo Vanne and Risto Vaittinen (Finland), Hyppolite D’Albis et al. (France), Fanny Kluge (Germany), Marina Zannella (Italy), Katharina Lisenkova (UK), Jože Sambt (Slovenia), Thomas Lindh et al. (Sweden) and Ció Patxot et al. (Spain). Hungarian data were produced by Gál and Vargha.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Róbert I. Gál is senior researcher at the Hungarian Demographic Research Institute and affiliated professor at Corvinus University of Budapest.

Pieter Vanhuysse is professor of comparative welfare state research at the Department of Political Science and Public Management of the University of Southern Denmark.

Lili Vargha is a junior researcher at the Hungarian Demographic Research Institute and a PhD candidate in the Doctoral School of Demography and Sociology at University of Pecs.

Notes

1 Resource transfers are studied here among current age groups, not diachronically between cohorts.

2 For critical reviews, see Vanhuysse and Goerres (2012), Tepe and Vanhuysse (2009).

3 Heckman and Masterov (2007); Carneiro and Heckman (2003); Francesconi and Heckman (2016), Heckman (2013); also Esping-Andersen (2009), Vanhuysse (2015). We view transfers to older generations as predominantly financing consumption, not investment, as such transfers do not systematically produce significant positive returns over long temporal horizons.

4 By socialization, we mean the arrangement of intergenerational transfers by large-scale, anonymized institutions, rather than close kin or local communities. The former include governments (e.g., public child care, social security) but also non-profit organizations serving households and for-profit corporations (e.g., private schools, pension plans) (Lee and Mason 2011: 65).

5 NTA was established by Lee (1994); a manual is United Nations (2013); an introduction is Lee and Mason (2011).

6 Since tax-transfer systems and data sources vary across countries, technical details of producing the age profiles differ. Istenič et al. (2016) provide a standardized methodology.

7 HETUS is an effort to harmonize European time use surveys: https://www.h2.scb.se/tus/tus/default.htm

8 They are considered the balancing item between private consumption and disposable income communicated among family members. Estimations are based on a household sharing model and a simple set of assumptions accommodating cross-country comparison (United Nations 2013). Calculations are made on large consumption surveys; in Europe, household budget surveys.

9 See note 3.

 

Additional information

Funding

This contribution was written as part of the AGENTA project funded by the Seventh Framework Programme of the European Union (grant agreement no 613247) and the ‘Taking Age Discrimination Seriously’ project, based at the Institute of State and Law (Prague) and funded by the Grantová Agentura České Republiky (grant number 17-266295).