The Unequal Impact of the Crisis By Age: An Analysis Based on National Transfer Accounts

The recent economic downturn starting in 2008, named as the Great Recession, has had a big impact on societies. Beyond its well-known macroeconomic effects, other socio-economic changes deserve attention. In particular, our paper focuses on the impact of the Great Recession on the intergenerational distribution, an issue that has been little explored but which can provide useful information for designing social policies. In the first part of our paper we revise the arguments for intergenerational redistribution, discussing the roles of both families and the welfare state. Later, using the National Transfer Accounts (NTA) methodology, we perform an in-depth analysis referred to Spain, one of the European countries most affected by the recent crisis. NTA constructs age profiles consistent with the macroeconomic aggregates of National Accounts, hence allowing for a detailed analysis by age. Our results confirm that, as most international reports (UNICEF, Save the Children) have pointed out before, children have borne the brunt of the crisis. The rise of unemployment and the fall in wages inevitably led to the impoverishment of families, without adequate social policies acting as a counterbalance. On the contrary, the elderly seems to be by far the best protected, thanks to the well-stablished pensions and health care public policies. Hence, the welfare state is proven to be a powerful and effective mechanism for intergenerational distribution, preventing poverty and social exclusion.

According to EUROSTAT data, the rate of children at risk of poverty or social exclusion (AROPE) in Spain increased from 28.6% to 34.4% between 2007 and 2015, while for the elderly dropped from 27.8% to 13.7%. And this seems to be a general pattern in most European countries. The question is why high-income societies are highly averse to old-age poverty while they seem to accept child poverty almost without flinching.