YOUNG AND OLD COMPETING FOR
PUBLIC WELFARE SERVICES
Lars-Erik Borge and Jørn Rattsø
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.