The generational conflict reconsidered

Abstract

The deteriorating trend in the incomes of families with young children is of increasing concern to both academics and politicians. Since the well-being of the elderly has improved concomitantly, many see an emerging generational clash. We argue that this zero-sum distributional trade-off view is largely premised on an overly static analysis and prefer, as an alternative, to examine the age-distribution of well-being through the lens of cohort dynamics. The aim of this article is very policy applied, an attempt to identify a win-win policy model that simultaneously ensures child and elderly welfare. We argue that social investments in children now will have strong and positive secondary effects in terms of helping maintain welfare guarantees for the elderly in the future. The key lies in minimizing child poverty, and we evaluate which policy mix may prove most effective for this end. We conclude that, in most countries, the elimination of poverty in families with children would be surprisingly affordable.