Global NTA, México D.F. 23-7/7/2018 THE UNEQUAL IMPACT OF THE CRISIS BY AGE: AN ANALYSIS BASED ON NATIONAL TRANSFER ACCOUNTS Meritxell Solé (UB), Giorgos Papadomichelakis (UB), Guadalupe Souto (UAB), Elisenda Rentería (CED-UAB), Ció Patxot (UB) WELTRANSIM PROJECT This project has received funding from the European Union s Seventh Framework Programme for research, technological development and demonstration under grant agreement no 613247.
The unequal impact of the crisis by age: An analysis based on National Transfer Accounts Giorgos Papadomichelakis (UB) Ció Patxot (UB) Elisenda Rentería (CED-UAB) Meritxell Solé (UB) Guadalupe Souto (UAB)
The risk of poverty for children is, in general, higher than for other age groups The welfare state basically protects the elderly, but not (to the same extent) children The situation has worsened with the crisis in a significant number of countries
Population at risk of poverty in the EU before and after social transfers 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 87.2% 88.0% 35.6% 36.7% 32.0% 34.0% 20.3% 21.2% 14.7% 17.1% 18.9% 14.0% 2008 2015 2008 2015 2008 2015 0-17 18-64 65 and more before social transfers after social transfers Source: Eurostat, 2016
Net public transfers to children and the elderly in NTA countries (% of their own consumption) Source: Authors elaboration from NTA data (www.ntaccounts.org)
Change in child (0-18) poverty rate and social exclusion Japan 2008 2012 USA Canada Iceland Greece Latvia Croatia Ireland Lithuania Spain Louxembourg Italy Estonia France Hungary Cyprus Slovenia U. K. Denmark Portugal Netherlands Malta Bulgaria Germany Czech Rep Austria Sweden Blegium Romania Finland Norway Switzerland Slovakia Poland 0 10 20 30 40 50 In 20 out of 31 European countries child poverty has increased with the crisis
People at risk of poverty in Europe (households with children) 30 25 20 15 10 SPAIN FINLAND SWEDEN UK FRANCE GERMANY ITALY European Union (27 countries) 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Eurostat, 2016
People at risk of poverty or social exclusion by age in Spain 35 30 (% of total population) 25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 Less than 18 years From 18 to 64 years 65 years or over total Source: Eurostat, 2016
People at risk of poverty by type of household in Spain 30 25 % of total population 20 15 10 5 10. 5.3 5,3 10,6 6 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Households without dependent children Households with dependent children Source: Eurostat, 2016
Our contribution Use NTA to explore the unequal impact of the crisis by age in Spain Estimate NTA for 2012 and compare results with previous available years (2000, 2006 and 2008)
National Transfer Accounts Analyses how individuals consume, produce, share resources and save And how resources are reallocated with intergenerational transfers, through three institutions: Markets, family and the public sector NTA complement (and are consistent with) National Accounts, by incorporating age and making it possible to disentangle intergenerational transfers
Basic NTA identity YL + YA + TG + + TF + = C + S + TG - + TF - inflows outflows C YL = (YA S) + [TG + -TG - ] + [TF + - TG - ] Lifecycle deficit LCD Asset-based reallocation ABR Net Public transfers TG Net private transfers TF
Lifecycle deficit scheme 18.000 16.000 Labor income US$ adjusted by Purchasing Power Parity 14.000 12.000 10.000 8.000 6.000 4.000 2.000 Deficit (LY < C) Surplus (LY > C) Consumption Deficit (LY < C) 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ childhood Working age Retirement
Per capita labor income profile (in constant 2012 euros per year) 35000 30000 25000 20000 15000 10000 5000 Lower labor income for the young Higher labor income for older workers 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ 2000 2006 2008 2012
Per capita consumption profile (in constant 2012 euros per year) 25000 20000 15000 10000 5000 Youngsters consumption has not come back to 2000s level The effects on the elderly are smoother 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ 2000 2006 2008 2012
Per capita lifecycle deficit profile (in constant 2012 euros per year) 25000 20000 15000 10000 The surplus size clearly shrinks 5000 0-5000 -10000-15000 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ LCD moves from age 26 to 30 2000 2006 2008 2012
Financing aggregated lifecycle deficit of children (0-19) and the elderly (65+) 120% 100% 80% 60% 64% 63% 56% 1% 60% 46% 20% 3% 27% 28% 1% 40% 66% 78% 71% 74% 20% 38% 40% 44% 39% 0% -2% -3% 0% -12% -2% -20% 2000 2006 2008 2012 2000 2006 2008 2012 0-19 65+ TG TF ABR
Per capita profile of net public transfers (TG) in Spain 15.000 10.000 Returning to the pre-crisis level Increasing TG for ages 65-71 5.000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ -5.000-10.000 Young workers paying less taxes 2000 2006 2008 2012 Older workers paying more taxes
Per capita profiles of public transfers inflows (transfers received) 20000 15000 10000 Sharp decrease in 2012 for children Decrease for old workers Significant increase for ages 65-71 5000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ 2000 2006 2008 2012
Per capita profiles of public transfers inflows: Education (E), health (H) and contributory pensions (P) 14000 12000 10000 8000 E-2008 E-2012 H-2008 H-2012 P-2008 P-2012 Sharp decrease in education Significant increase for pensioners aged 65-80 6000 4000 2000 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90
Per capita profiles of net private transfers 15000 10000 5000 0 The most important flow is from parents to children Important reduction with the crisis 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90-5000 -10000-15000 2000 2006 2008 2012
Net public transfers to the children and the elderly in Spain (in % of their own consumption) 70% 65% 60% TG/C young 55% 50% 45% 2008 40% 35% 2006 2012 2000 30% 30% 40% 50% 60% 70% TG/C elderly
Main findings Children received much less public and private transfers during the crisis, so their consumption has significantly decreased Labor income has decreased especially for younger workers By contrast, public transfers to the elderly have increased
Main findings Welfare state systems have proven to be a very effective tool in improving intergenerational redistribution and reducing inequalities Why are high-income societies highly averse to old-age poverty while they seem to accept child poverty quite easily? - An automatic policy to protect the elderly and not children? - Foster education as a way to pre-fund the PAYG pension system