Elderly Bias, New Social Risks, and Social Spending: Investigating Change and Timing in Eight Programs Across Four Worlds of Welfare, 1980-2003

Abstract

Over the past few decades, all affluent democracies have been coping with two major new trends: population aging, and new social risks resulting from de-industrialization. How have these trends, and their timing, affected welfare spending within and between countries? We investigate up to 21 OECD democracies between 1980 and 2003 with respect to eight separate spending categories (old age pensions, incapacity benefits, survivors benefits, health spending, family spending, unemployment benefits, active labor market programs, and education) and two composite indicators of aggregate welfare spending bias: ENSS (elderly/non-elderly spending share) and NSRS (new social risks share). We find that population aging drives up pension spending, but not health spending or ENSS. Contemporaneous levels of new social risks conspicuously fail to affect either NSRS or individual program spending. But the timing of the large-scale arrival of such risks 'on the ground' does play a key role. Countries that entered the postindustrial society comparatively late record lower NSRS values, as they spend less on programs such as education and family allowances. Institutional differences as captured by welfare regime type continue to matter crucially in accounting for variation between welfare states.