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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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  1. Steven G. Craig & Robert P. Inman, 1985. "Education, Welfare, and the "New" Federalism: State Budgeting in a Federalist Public Economy," NBER Working Papers 1562, National Bureau of Economic Research, Inc.
  2. Fernandez, Raquel & Rogerson, Richard, 1997. "The Determinants of Public Education Expenditures: Evidence from the States, 1950-1990," Working Papers 97-16, C.V. Starr Center for Applied Economics, New York University.
  3. James M. Poterba, 1996. "Demographic Structure and the Political Economy of Public Education," NBER Working Papers 5677, National Bureau of Economic Research, Inc.
  4. 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.
  5. Ueli Grob & Stefan C. Wolter, 2007. "Demographic Change and Public Education Spending: A Conflict between Young and Old?," Education Economics, Taylor & Francis Journals, vol. 15(3), pages 277-292.
  6. David M. Cutler & Douglas W. Elmendorf & Richard J. Zeckhauser, 1993. "Demographic Characteristics and the Public Bundle," NBER Working Papers 4283, National Bureau of Economic Research, Inc.
  7. 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.
  8. Grossman, Gene M & Helpman, Elhanan, 1998. "Intergenerational Redistribution with Short-Lived Governments," Economic Journal, Royal Economic Society, vol. 108(450), pages 1299-1329, September.
  9. Brueckner, Jan K. & Joo, Man-Soo, 1991. "Voting with capitalization," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 453-467, November.
  10. Gradstein, Mark & Kaganovich, Michael, 2004. "Aging population and education finance," Journal of Public Economics, Elsevier, vol. 88(12), pages 2469-2485, December.
  11. 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.
  12. Ladd, Helen F. & Murray, Sheila E., 2001. "Intergenerational conflict reconsidered: county demographic structure and the demand for public education," Economics of Education Review, Elsevier, vol. 20(4), pages 343-357, August.
  13. Ed Baldson & Eric Brunner, 2003. "Intergenerational Conflict and the Political Economy of School Spending," Working papers 2003-24, University of Connecticut, Department of Economics.
  14. Poterba, James M, 1998. "Demographic Change, Intergenerational Linkages, and Public Education," American Economic Review, American Economic Association, vol. 88(2), pages 315-20, May.
  15. Holtz-Eakin, Douglas, 1992. " Elections and Aggregation: Interpreting Econometric Analyses of Local Governments," Public Choice, Springer, vol. 74(1), pages 17-42, July.
  16. 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.
  17. 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.
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