The Age-Related Distribution of Social Transfers: The United States in Comparative Perspective

Purpose: The generational inequities between children and the elderly have been one of the main concerns among researchers and policy makers in the United States. During 1970's to 1980's, the United States had successfully raised the economic status of elderly people by enactment of a series of government programs and policies; however, during the same period, the relative economic status of children had deteriorated (Ozawa & Kim, 1998; Ozawa, 1999), and this divergence in economic status remains unchanged today. To explain this divergence, this study explores to what extent social transfers in the United States and other highly industrialized countries are oriented towards the support of children and the elderly.

Method: To achieve the purpose of this study, the authors utilize both country-level data from OECD social expenditure dataset (SOCX) and household-level data from Luxembourg Income Study (LIS). First, to compare government efforts for children and those for the elderly, we present social spending on old age and family benefits based on OECD SOCX. Furthermore, to control for different demographic compositions among countries, per child and per elderly measure of social spending are presented. Secondly, to show distributional pattern of social transfers by age group, we calculated how much social transfers each age group received, based on LIS dataset.

Findings: Government's social spending on old age and family benefits in the United States are 6% and 0.7% of GDP, respectively, in 2001. The ratio of social spending on old age benefits to family benefits in the United States is highest among 13 industrialized countries. Taking per elderly and per child measures, the ratio is still highest in the United States, compared to other countries. Turning to the distributional pattern of social transfers by age group, in all 13 countries, elderly people tend to receive more social transfers than children. However, there is a huge variation among countries in the degree of differences between two groups. For example, taking figures in 2000, the ratio of social transfers received by the elderly (aged 65 or more) to those received by children (aged 17 or less) in the United States is 8.1, and corresponding numbers are 2.4, 4.4, and 4.0 for the United Kingdom, France, and Sweden, respectively. In terms of this ratio, the United States ranks 2nd highest following Italy.

Conclusions and Implications: In comparison with other industrialized countries, social spending in the United States is highly oriented towards the support for elderly people, and this may explain poor social indicators of U.S. children. This result argues for the need to reframe the allocation of social welfare resources to meet the needs of both children and the elderly, major dependent groups in our society.