Unequal Welfare States

Abstract

The financial sustainability of the ageing welfare states in Europe has become a key policy issue recently. This study highlights a different aspect of the ageing process, namely its potential impact on income distributions. Since older people usually live on a lower income, their growing share in the population could mean that income inequality and poverty rates will rise in the years ahead. To what extent this occurs, however, also depends on the future shape of pension systems and other social security schemes.

The book seeks to provide an empirical assessment of the relevance of welfare institutions for income distributions over the coming decades. The main current European welfare state types are identified through an analysis of quantifiable system characteristics. This is followed by an in-depth analysis of future inequality, redistribution and poverty rates for six countries: France, Germany, Italy, the United Kingdom, Denmark and the Netherlands. Together these countries represent not only the different 'welfare regimes', but also a large proportion of the population of the European Union.

The distributive forecasts are based on demographic projections and economic modelling of various policy strategies. The outcomes indicate a clear trade-off between financial sustainability and distributive consequences. They also show that the policy reactions of the various governments will partly determine the financial and social consequences of the ageing process.