Policy paper 149

The growing intergenerational divide in Europe – What role for the welfare state?

This Policy paper by Pia Hüttl, Karen Wilson and Guntram Wolff, published within the Vision Europe project, deals with the growing intergenerational divide in Europe.

During seven years of economic crisis, the intergenerational income and wealth divide has increased in many European Union countries. This Policy paper by Pia Hüttl, Karen Wilson and Guntram Wolff  reviews the pension reforms implemented by several countries and provides policy recommendations to address the intergenerational divide.

  • During the economic and financial crisis, the divide between young and old in the European Union increased in terms of economic well-being and allocation of resources by governments. As youth unemployment and youth poverty rates increased, government spending shifted away from education, families and children towards pensioners.
  • To address the sustainability of pension systems, some countries implemented pension reforms. The authors analysed changes to benefit ratios, meaning the ratio of the income of pensioners to the income of the active working population, and found that reforms often favoured current over future pensioners, increasing the intergenerational divide.
  • The authors recommend reforms in three areas to address the intergenerational divide: improving European macroeconomic management, restoring fairness in government spending so the young are not disadvantaged, and pension reforms that share the burden fairly between generations.

The English version of this Policy paper is available on Bruegel’s website: here. 

This Policy paper is published within the Vision Europe project.

The Jacques Delors Institute takes part to the Vision Europe project, a consortium of think tanks and foundations collaborating to address some of the most pressing public policy challenges facing Europe. Through research, publications and an annual summit, we aim to be a forum for debate and a source of recommendations to improve evidence-based policy-making at both a national and EU level and to foster as appropriate European integration. In 2015 we commonly work on “The Future of the Welfare State”, developing innovative policy recommendations on how to ensure the long-term sustainability of national welfare systems.
Vision Europe other participating organizations are:
Bertelsmann Stiftung (Germany)
Bruegel (Belgium)
Calouste Gulbenkian Foundation (Portugal)
Chatham House (UK)
Compagnia di San Paolo (Italy)
The Finnish Innovation Fund Sitra (Finland).
For more information about the project please refer to www.vision-europe-summit.eu
and follow the twitter hashtag #VisionEurope.