Asymmetric socialisation and optical illusions – incorporating intra-familial transfers into the analysis of the welfare state

Robert I. Gal, Hungarian Demographic Research Institute
Pieter Vanhuysse, University of Southern Denmark
Lili Vargha, Hungarian Demographic Research Institute

A large and growing body of literature in political science documents the “pro-elderly bias” of public spending; the increasing “gerontocracy” and “grey power.” Our aim is to raise doubts about this general consent, which considers age-bias for the old an established fact, and extend the agenda of research on the welfare state. We demonstrate that European societies spend significantly more on children per capita than on the elderly if all expenditures are taken into account. We apply new developments in national accounting, National Transfer Accounts (NTA) and National Time Transfer Accounts (NTTA), and analyse the institutional composition of the ways childhood and old age are funded through inter-age transfers. Our data represent about 70 percent of the population of the European Union. We find an important difference in the composition of transfers in the two dependent sections of the lifecycle: children are raised by their parents whereas the old are supported by society. Most of the resources dedicated to the elderly flow through institutions larger than the kinship (we call these transfers socialised), which are well documented. In contrast, children are supported by private transfers (mostly from their parents), which are not registered in public statistics but captured by NTA, as well as services and goods produced by unpaid household labour (again, mostly of their parents), which are captured by NTTA. In short, there is a manifest asymmetry in the visibility of transfers. We find another consequence of asymmetric visibility. Namely, the individual burden on people of working age supporting dependent cohorts depends on the number of their children. Since this remains mostly unrecognised by the public transfer system people with more children receive lower returns on their transfers than people with less children if all transfers are taken into account.