Old versus young: How much do countries spend on social benefits? Deterministic modeling for government expenditure

Abstract

The increasing levels of population ageing have led to debates questioning the spending hierarchy granted by governments to social benefits. In this article, we use a Lotka–Voltera competition model based on differential equations to investigate the relationships between old age pensions, family/children benefits, sickness/health care, and unemployment benefits. The analysis focuses on Austria, Germany, and Switzerland between 2007 and 2018 with the aim of better understanding whether and when priority is given to benefits in favour of the older versus younger cohorts of the population. Findings for the German-speaking European triangle show that an intergenerational conflict is significantly present in government expenditure. In particular, old age pensions and family and children benefits mostly interact in a predator–prey relationship that favours old age pensions, while expenditure for sickness and health care predominates the scenario.

Aging well? Social spending, age, and subjective wellbeing across Europe

“…More precisely, the largest expenditures go towards pension payments, survivors, sickness, and disability, while much less is typically spent on family and children, unemployment, and housing. "The growing imbalance between the needs of the old and the young is likely to create a fracture over welfare policy: in most developed countries, one can observe a rise in pensions spending due to the increasing ageing of the population […] On the other hand, the homogeneous proportion of old voters makes it difficult to reform extant pensions systems in favour of the young, as well as encourage future workforce participation in those countries where 'tax increases are needed to pay for transfer to growing older population'" (Focacci 2022). Thus, it becomes crucial to understand age-subjective wellbeing association differences potentially resulting from different social spending levels.…”