The Drift of Public Spending Towards the Elderly: A Generational Analysis of the Trend of Public Policies in Spain

Abstract

The tendency for public welfare spending to be increasingly aimed at the elderly has been pointed out for the US and other developed countries. While population ageing is a common trend, it is not obvious why the shift in spending exceeds the trend in ageing, or why per capita spending on the elderly increases. We show that this is the case in Spain, identify the losers from this development, discuss the policies that underlie this trend, and propose adjustments based on Musgrave's fixed proportions rule as an inter-generationally fair distribution.

Keywords: Intergenerational equity, Musgrave's rule, Spanish social policy and ageing

JEL Classification: I32, I38, H53, H55, J14