The Connection between Welfare Regimes and Inter Age Reallocation Regimes: Results Based on National (Time) Transfer Accounts

Tanja Istenic, University of Ljubljana, Faculty of Economics
Jože Sambt, University of Ljubljana, Faculty of Economics
Lili Vargha, Hungarian Demographic Research Institute, Budapest

The economic life cycle and its financing strongly depend on country-specific institutional and cultural settings. Therefore, it can be expected that the cross-country differences in intergenerational flows are connected with the differences in the welfare regimes. Previous research on transfer and welfare regimes is to some extent limited, because it focuses mainly on private transfers or it takes into account only certain age groups. This paper uses the recently developed National Transfer Accounts (NTA) methodology that enables comprehensive measurement of (1) public and (2) private intergenerational transfers (not only the ones that go through monetary transactions or exchanged for money, but also those transfers that result from the family provision of welfare in terms of unpaid work), as well as (3) asset-based reallocations resulting from interaction with capital and financial markets. Moreover, we take into account all age groups. Our analysis provides comparable NTA results for 10 EU countries from 2010 and links welfare and inter-age reallocation regimes. Based on five indicators, we demonstrate a clear connection between inter-age reallocation and welfare regimes and classify countries into three different groups: social-democratic (Finland, Hungary, Slovenia, and Sweden), conservative (Austria, France, Italy, and Spain), and liberal (Germany and the United Kingdom). Germany is the main exception; based on inter-age reallocation results, it is not characterized as a prototypical conservative welfare state, but rather as a liberal welfare state.

Presented in Session 33: Intergenerational Relations and Transfer Channels