Abstract
This study analyses age-specific differences in income trends in nine European countries. Based on data from National Accounts and the European Union Statistics on Income and Living Conditions, we quantify age-specific changes in income between 2008 and 2017 and decompose these changes into employment, wages, and public transfer components. Results show that income of the younger age groups stagnated or declined in most countries since 2008, while income of the older population increased. The decomposition analysis indicates that the main drivers of the diverging trends are higher employment among the older population and a strong increase in public pensions, especially for women.
Highlights
Income of young adults fell behind income of the older population in most European countries between 2008 and 2017, even in countries where employment rates among the young increased (Eurostat, 2020d, c)
The limited evidence focuses on equivalised household income and shows that income of households with children and young adults stagnated or decreased in most of Europe after the financial crisis, while it increased for the older population (Chen et al, 2018; Wittgenstein Centre, 2020)
Our study aims at closing these gaps by addressing the following research questions based on data from the European system of Accounts (ESA) and the European Statistics on Income and Living Conditions (EU-SILC): 1. How did aggregate per-capita income and its components change between 2008 and 2017?
Summary
Income of young adults fell behind income of the older population in most European countries between 2008 and 2017, even in countries where employment rates among the young increased (Eurostat, 2020d, c). The limited evidence focuses on equivalised household income and shows that income of households with children and young adults stagnated or decreased in most of Europe after the financial crisis, while it increased for the older population (Chen et al, 2018; Wittgenstein Centre, 2020). Knowledge about age-specific income trends and their determinants is necessary to understand central economic and demographic developments. Poverty rates among older adults declined during the same period (Eurostat, 2020b) Such developments require attention, because the economic situation of young adults is a crucial determinant of whether and when they form a family, and the number of children they have. It is of utmost importance to study the drivers of income changes at each life-stage, to understand their relation with social, economic and demographic developments
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