Spending on children falls, while old age spending goes up in the EU

Spending on family-related benefits has fallen as a share of total social protection expenditure between 2008 and 2012 in 17 European countries out of 32 for which comparable data are available from Eurostat. Increases in spending on families and children were recorded in only two countries, Germany and Bulgaria. In 13 countries expenditure on family-related benefits has remained virtually unchanged as a share of the total (i.e. within 0.50 percentage points of the 2008 level). In contrast, spending on old age benefits increased in 24 countries, remained unchanged in four countries and decreased in only three (Ireland, Germany and Switzerland). In 2012, the share of old age spending ranged from 20% in Ireland to 54% in Latvia, while the share of family/children spending ranged from 3% in Turkey to 16% in Luxembourg.

Source: Eurostat (last update 12.11.2014).
Source: Eurostat (last update 12.11.2014).

Since both family and old age spending are analysed as a proportion of the total social protection expenditure, when more resources are used for one type of spending, there may be less left for another. Indeed, there is a statistically significant negative correlation between the percentage point change in family spending and the change in old age spending between 2008 and 2012 (r=-0.36, p<0.05). By and large, increases in old age spending are associated with decreases in spending on family-related benefits. Removing one obvious outlier, Ireland, where both family and old age spending decreased as shares of the total, would produce a much stronger correlation of -0.53 (p<0.01).

Source: Eurostat (last update 12.11.2014).
Source: Eurostat (last update 12.11.2014).

Strikingly, monetary child poverty went up to a greater extent (or decreased by a smaller amount) in countries that increased the share of old age spending (r=0.47, p<0.01). This might be because when old age spending goes up as a share of total expenditure, there is less left for working-age benefits, such as family/children, unemployment, and housing, which are all relevant to children’s material conditions during the economic crisis. Although this finding needs to be interpreted with extreme caution, because other relevant factors have not been taken into account, this evidence suggests that countries that prioritised spending on pensioners during the crisis left children and families economically vulnerable.

Source: Eurostat (last update 12.11.2014).
Source: Eurostat (last update 12.11.2014).

Disclaimer: the views expressed in this post are the responsibility of the author alone.

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Spending on children falls, while old age spending goes up in the EU

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