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Intergenerational Transfers and Public Expenditure on the Elderly in Modern Britain1

Published online by Cambridge University Press:  14 November 2008

Paul Johnson  and
Jane Falkingham
Jane Falkingham
Affiliation:
Department of Economic History, London School of Economics, Houghton Street, London WCaA 2AE.
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Abstract

In the United States, much attention has recently been directed to the issue of whether the welfare system has become over-generous to the retired population, at the expense of families with children. The proportion of the US elderly population living in poverty has fallen significantly in the last fifteen years while the number of poor children has increased rapidly, and it has been suggested that this lack of investment in the next generation of workers may have disastrous longterm consequences for the U.S. economy. This paper considers whether similar trends are evident in Britain. It reviews data on the poverty and income of the elderly population, and finds little unequivocal evidence of relative economic gain over the last two decades, although it is clear that many children have suffered from the recent rise in unemployment-induced poverty. It also looks at direct public expenditure on the elderly through both the pension and the health and personal social services systems, and finds no evidence of a transfer of public resources away from children and towards the elderly population. The paper concludes that the British welfare state has been remarkably neutral in its allocation of resources between generations, and that, in the British context, any discussion of inter-generational conflict for welfare resources establishes a false dichotomy, because economic inequality within broad age groups is much greater than inequality between age groups.

Type
Research Article
Information
Ageing & Society , Volume 8 , Issue 2 , June 1988 , pp. 129 - 146
Copyright
Copyright © Cambridge University Press 1988

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References

NOTES

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26 For the years since 1983 this information has been presented in diagrammatic form, which does not allow appropriate disaggregation of per capita expenditure between these different services. The relevant figures for 1974–83 can be found in successive annual issues of the Government Expenditure Plans, vol. II from 1977 (Cmnd 6721–II) to 1985 (Cmnd 9428–II).