Abstract WP20-03

This paper investigates how different welfare regimes affect income redistribution both within generations and between generations in the face of population ageing. We compare countries representing different welfare state regimes (Spain, Austria, Finland and the United Kingdom). We apply the dynamic microsimulation model microWELT incorporating new disaggregated National Transfer Account (NTA) data. This bottom-up modelling strategy makes it possible to project the net present value of expected transfers for each generation and sociodemographic group. Our results contribute to the existing welfare regimes’ literature by measuring age-specific public and private transfers disaggregated by gender, educational level and family type. We find differences in the role of private and public transfers in the intra and intergenerational redistribution across countries, which can be linked to the various welfare state regimes. In Finland, the present value of public transfers received by the 2010 birth cohort is higher than private transfers, while in Austria both are almost the same. In contrast, in Spain and the UK, private transfers play the primary role. There are significant differences in the interplay between private and public transfers related to parenthood. While parents privately transfer substantially more than childless people in all studied countries, the Austrian welfare state fully compensates for these differences through public transfers to parents; such compensation is much weaker and more targeted towards the lower educated in the other countries.