Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2021 Aug 25;16(8):e0255760.
doi: 10.1371/journal.pone.0255760. eCollection 2021.

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

Pieter Vanhuysse  1   2   3 , Marton Medgyesi  4   5 , Robert I Gal  1   3   4   6
Affiliations

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

Pieter Vanhuysse et al. PLoS One. .

Abstract

Social scientists identify two core functions of modern welfare states as redistribution across (a) socio-economic status groups (Robin Hood) and (b) 'the lifecycle' (the piggy bank). But what is the relative importance of these functions? The answer has been elusive, as the piggy bank is metaphorical. The intra-personal time-travel of resources it implies is based on non-quid-pro-quo transfers. In practice, 'lifecycle redistribution' must operate through inter-age-group resource reallocation in cross-section. Since at any time different birth cohorts live together, 'resource-productive' working-aged people are taxed to finance consumption of 'resource-dependent' younger and older people. In a novel decomposition analysis, we study the joint distribution of socio-economic status, age, and respectively (a) all cash and in-kind transfers ('benefits'), (b) financing contributions ('taxes'), and (c) resulting 'net benefits,' on a sample of over 400,000 Europeans from 22 EU countries. European welfare states, often maligned as ineffective Robin Hood vehicles riddled with Matthew effects, are better characterized as inter-age redistribution machines performing a more important second task rather well: lifecycle consumption smoothing. Social policies serve multiple goals in Europe, but empirically they are neither primarily nor solely responsible for poverty relief and inequality reduction.

PubMed Disclaimer

Conflict of interest statement

The authors have declared that no competing interests exist.

Figures

Fig 1
Fig 1. Per capita welfare benefits (cash and in-kind) by age and SES in the European Union.
Source: Authors’ calculation. Notes: Calculated from a pooled sample of over 400,000 individuals from 22 EU countries. National values are re-scaled based on the average labor income of 30-49-year-olds. The image is rotated.
Fig 2
Fig 2. Per capita taxes and contributions financing welfare benefits by age and SES in the European Union.
Sources and notes as in Fig 1.
Fig 3
Fig 3. Per capita net welfare benefits (benefits minus taxes) by age and SES in the European Union.
Sources and notes as in Fig 1.
Fig 4
Fig 4. Average marginal effects of socio-economic status and age groups in the benefits, taxes, and net benefits models (reference category, age = 1 (youngest), SES = 1 (lowest)).
Note: Based on regression models including only age and SES dummies and their interaction as explanatory variables.
See this image and copyright information in PMC

References

    1. Barr N. Economics of the welfare state. Oxford: Oxford University Press; 1987.
    1. Barr N. Economic Theory and the Welfare State: A Survey and Interpretation. J Econ Lit. 1992;30(2):741–803.
    1. Atkinson AB. Incomes and the Welfare State. Cambridge UK: Cambridge University Press; 1995.
    1. Offer A. The Economy of Obligation: Incomplete Contracts and the Cost of the Welfare State. 2012. (Oxford Discussion Papers in Economic and Social History). Report No.: 103.
    1. Cantillon B, Vandenbroucke F, editors. Reconciling Work and Poverty Reduction: How Successful Are European Welfare States? Oxford: Oxford University Press; 2014.

Publication types