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Young and old competing for public welfare services

  • Lars-Erik Borge

    ()

    (Department of Economics, Norwegian University of Science and Technology)

  • Jørn Rattsø

    ()

    (Department of Economics, Norwegian University of Science and Technology)

Generational conflict affects the supply of public welfare services, and the rising share of elderly is seen as a threat to educational spending. We offer an analysis of spending in child care, primary and lower secondary education, and care for the elderly related to the size of young and old voters. The age groups face possible disadvantages of being part of a large cohort, but also can gain political strength to crowd out services for the other groups. The decentralization of public services in Scandinavia allows for the simultaneous analysis of age related services. Using panel data from Denmark for the period 1989-1996, we find that the elderly are reducing spending in child care and education, but the young do not threaten services for the elderly. It is a disadvantage for both the elderly and the young to be part of a large cohort. The possible Tiebout-bias is handled with instrument variables predicting the relevant age composition variables.

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Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 8607.

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Length: 22 pages
Date of creation: 24 May 2007
Date of revision:
Handle: RePEc:nst:samfok:8607
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Web page: http://www.svt.ntnu.no/iso/WP/wp.htm
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  1. Ueli Grob & Stefan C. Wolter, 2005. "Demographic Change and Public Education Spending: A Conflict between Young and Old?," CESifo Working Paper Series 1555, CESifo Group Munich.
  2. Borge, Lars-Erik & Rattso, Jorn, 1995. "Demographic shift, relative costs and the allocation of local public consumption in Norway," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 705-726, December.
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  8. Borge, Lars-Erik & Rattso, Jorn & Sorensen, Rune, 1995. " Local Government Service Production: The Politics of Allocative Sluggishness," Public Choice, Springer, vol. 82(1-2), pages 135-57, January.
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  10. Harris, Amy Rehder & Evans, William N. & Schwab, Robert M., 2001. "Education spending in an aging America," Journal of Public Economics, Elsevier, vol. 81(3), pages 449-472, September.
  11. Ed Baldson & Eric Brunner, 2003. "Intergenerational Conflict and the Political Economy of School Spending," Working papers 2003-24, University of Connecticut, Department of Economics.
  12. Holtz-Eakin, Douglas & Lovely, Mary E. & Tosun, Mehmet S., 2004. "Generational conflict, fiscal policy, and economic growth," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 1-23, March.
  13. Cutler, David M & Elmendorf, Douglas W & Zeckhauser, Richard J, 1993. "Demographic Characteristics and the Public Bundle," Public Finance = Finances publiques, , vol. 48(Supplemen), pages 178-98.
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  15. Schwab, Robert M. & Oates, Wallace E., 1991. "Community composition and the provision of local public goods : A normative analysis," Journal of Public Economics, Elsevier, vol. 44(2), pages 217-237, March.
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  17. Gradstein, Mark & Kaganovich, Michael, 2003. "Aging Population and Education Finance," CEPR Discussion Papers 3950, C.E.P.R. Discussion Papers.
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