GINI DP 11: An analysis of generational equity over recent decades in the OECD and UK

In The Pinch David Willetts (2010) attracted attention by asking whether “the boomers have been guilty of a monumental failure to protect the interest of future generation” p xv. This was just the latest contribution to a long running concern of social policy analysts about horizontal equity or generational fairness. Using OECD data 1980-2007 in the first part of this paper we show that there is no evidence that social expenditure has been shifting in favour of the elderly at the expense of children except perhaps recently in Nordic countries. For the UK we have created a time-series using the published articles since 1988 and the raw data sets since 1996 for the annual Office for National Statistics analyses of the Effect of Taxes and Benefits on Household Incomes and used it to analyse trends in the redistributive impact of cash benefits, direct and indirect taxes and services on the retired and households with children and across the income distribution. The analysis shows how the relative support for the retired versus children has changed over time, which elements have contributed to the changes and for which part of the income distribution. There has been a small shift in final income in favour of the elderly but it was not the result of changes in taxes, benefits or services in kind but rather a change in the original income distribution in favour of the elderly.