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Balancing the welfare state

The welfare state favours the elderly over the child population throughout its life cycle

Concepció Patxot and Gianko Michailidis, Universitat de Barcelona

As it expands, the welfare state becomes biased in favour of the elderly: the cost of meeting the needs of the elderly is highly socialised, while the cost of catering for the requirements of the child population is left to a larger extent in the hands of their families. This means that both children and young people are more disadvantaged during the present economic cycle, and also more exposed to the risk of poverty. Given that the financial sustainability of the welfare state is endangered by demographic ageing, this bias in favour of the elderly may be creating negative incentives for childbearing. This in turn would generate a vicious circle that would undermine the financial sustainability of the welfare state. This sustainability could improve if welfare policies acquired a life-cycle perspective.
Key points
  • 1
       The welfare state has replaced family transfers asymmetrically, favouring resources allocated to the elderly over those allocated to the child population.
  • 2
       The economic crisis of 2008 has aggravated this situation in Spain; this juncture accounts for the increase in child poverty, which is higher than that found in the rest of the population.
  • 3
       As a result of population ageing, the bias in intergenerational transfers works in favour of the political sustainability of the system, but against its financial sustainability.
  • 4
       With the aim of guaranteeing the financial sustainability of the welfare state, redistributive systems should be designed taking into consideration their impact on the whole of the life cycle.
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