Study on Intergenerational Fairness

PROJECT CO-ORDINATOR

Michael Fuchs

PROJECT TEAM AT THE EUROPEAN CENTRE

Tamara Premrov, Leonard Geyer, Ricardo Rodrigues

EXTERNAL PROJECT CO-ORDINATOR

Barbara De Micheli (Project Manager), Fondazione Giacomo Brodolini (Italy)

Michele Raitano (Scientific Coordinator), Sapienza University of Rome (Italy)

PROJECT PARTNERS

FGB – Fondazione Giacomo Brodolini (Italy)

LSE – London School of Economics (United Kingdom)

BACKGROUND

As noted in the Reflection Paper on the Social Dimension of Europe, “ageing also brings the question of intergenerational fairness to the fore. There is today a real risk of a generational divide between younger and older people in terms of decision-making, wealth, material security and access to housing as well as in terms of sharing the financial and fiscal burden of an ageing society.” However, structural reforms and the design of tax and benefit systems can mitigate or aggravate such intergenerational inequalities in the short term with long-term consequences. European social protection systems perform an important role of automatic stabilisation in times of economic shock. This was seen, for instance, in the 2008/9 economic crisis in which many European countries mitigated the worst effects of the crisis through the tax benefit systems. However, in some Member States, tight fiscal space led to the need for consolidation through discrete policy choices, some of which impacted on different parts of the population differently. At the same time, some structural aspects of the social benefit system (e.g. indexation of pensions) may have contributed to generational inequalities.

AIMS

The purpose of this study is to pursue an assessment of various possible policy choices while providing a methodology for assessing intergenerational fairness. Specifically, the European Centre will be responsible for addressing the following research questions:

  • Did automatic stabilizers and fiscal consolidation undertaken in certain Member States in the wake of the economic crisis impact upon different age groups asymmetrically and in what way?
  • What policy recommendations could be formulated to better support intergenerational fairness during the crisis period? What would have been the impact of such policies, had they been applied?

METHODS

For the analysis we will use the tax-benefit microsimulation model EUROMOD. We will focus on the years 2007, 2009 and 2011. Hence, data of the EU-SILC waves of 2008, 2010 and 2012 will be used. In order to assess the underlying effects leading to a potential shift in the income distribution between generations in the course of the economic crisis, the effects of discretionary policy changes, automatic stabilisers (such as progressive tax systems, unemployment or social assistance benefits) and socio-economic and demographic characteristics of the population will have to be disentangled. In terms of policy recommendations, we will compare the simulated disposable income of an individual/household before and after the hypothetical reforms, thus, keeping all other effects constant. The selection of policies will not focus a priori on younger age groups. Instead, we will first check who benefitted/lost in the aftermath of the crisis in the different Member States and then choose relevant policies.

ACTIVITIES/MILESTONES

  • Inception report: February 2020
  • Interim report: May 2020
  • Final report: November/December 2020

The European Centre for Social Welfare Policy and Research supports the Sustainable Development Goals

European Centre Logo
UN SDG Reduced Inequalities

FUNDED BY

DG Employment, Social Affairs and Inclusion, European Commission

PROJECT DURATION

2020/01 – 2020/12