{
  "title": "A Dream Deferred: Inequality and Poverty Across Generations in Europe",
  "publication": "IMF Blog, January 24, 2018",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2018/01/24/a-dream-deferred-inequality-and-poverty-across-generations-in-europe",
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  "summary": "Publication and author: Christine Lagarde, January 24, 2018.",
  "sections": [
    {
      "heading": "Overview and key findings",
      "content": "- Publication and author: Christine Lagarde, January 24, 2018.\n- Main theme: widening gap between generations in Europe — working-age people, and especially the young, are falling behind despite relatively stable average income inequality since 2007.\n- Incomes:\n  - Incomes for those who are 65 years and older increased by 10 percent as pensions were better protected.\n  - Incomes for young people declined after the 2007 crisis due to unemployment; they have since recovered, but have not grown.\n- Poverty:\n  - Before the global financial crisis, relative poverty of young (18-24) and older people (65 +) in Europe was similar.\n  - Since the crisis, a major gap has developed: one in four young people in the region are at risk of poverty — living with incomes below 60 percent of the median.\n- Labor market and employment statistics:\n  - Youth unemployment started high and spiked to 24 percent in 2013.\n  - Today, nearly one in five young people in Europe are still looking for work.\n- Financial vulnerability:\n  - Young people have the highest debt relative to their assets of any age group, making them more vulnerable to financial shocks.\n- Labor-market dynamics:\n  - IMF staff research shows unemployment can lead to “scarring”: long spells of unemployment and limited experience reduce the likelihood of finding work and depress future wages.\n  - Underemployment increased following the crisis.\n  - The rise of the “gig” economy and increases in temporary contracts decreased job stability, particularly for the young.\n- Social protection:\n  - Following the crisis, non-pension social benefits were often curtailed, sometimes too narrowly targeted or not indexed to inflation, limiting effectiveness for young people.\n  - Pensions and social security have helped many, particularly Europe’s senior citizens, who have been relatively well protected."
    },
    {
      "heading": "Country examples and policy-relevant practices",
      "content": "- Germany:\n  - Long-standing apprenticeships and training programs have helped the young stay in the workplace.\n  - Flexible employment rules allowed young people to keep their jobs during and after the crisis.\n  - Result: Germany’s youth now have the lowest unemployment of any European Union country.\n- Portugal:\n  - Exempted its first-time job holders from paying social security taxes for three years.\n  - Youth unemployment remains high, but the measure is cited as moving in the right direction."
    },
    {
      "heading": "Drivers and mechanisms",
      "content": "- Primary drivers of intergenerational inequality in focus: income effects from unemployment, labor-market changes (underemployment, temporary work, gig economy), and weakened non-pension social benefits.\n- Mechanisms:\n  - Lost wages and foregone savings during formative career years are difficult to recover later.\n  - Scarring effects reduce long-term earnings trajectories.\n  - Insufficient social protection for young workers amplifies risk of poverty."
    },
    {
      "heading": "Policy recommendations and actions for policymakers",
      "content": "- Labor-market measures:\n  - Reduce social security contributions and taxes on low wage workers to create jobs and incentivize work.\n  - Invest in education and training to help young people close the skills gap and improve future job prospects.\n- Social protection reforms:\n  - Adapt social spending, especially unemployment and other non-pension benefits, to ensure young people are better protected in the event of job loss.\n- Tax policy:\n  - Consider more progressive tax systems and wealth taxes (including inheritance taxes) to help fund social programs for younger citizens; note that wealth taxes are lower today than in 1970.\n- Principles:\n  - Policies should be tailored to country-specific needs, recognize political realities, and stay within a budget.\n  - Emphasis that supporting young people is complementary to protecting older generations — not a zero-sum choice."
    },
    {
      "heading": "Risks, opportunities, and timing",
      "content": "- Risks:\n  - Without action, a generation may never be able to recover; scarring and high debt-to-asset ratios increase long-term vulnerability.\n- Opportunities:\n  - Stronger global growth and the recovery in Europe provide a timely window to implement difficult but necessary reforms.\n- Message:\n  - Building an economy that works for young people creates a stronger foundation for everyone, supports social safety nets, and helps rebuild trust within society.\n\nSource: A Dream Deferred: Inequality and Poverty Across Generations in Europe — Christine Lagarde, January 24, 2018.\n\n---\n\n\n References\n\n- https://www.imf.org/wp-content/uploads/2018/01/eng-jan-24-md-blog1.jpg\n- https://www.imf.org/wp-content/uploads/2018/01/eng-jan-24-md-blog2.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2018/01/24/a-dream-deferred-inequality-and-poverty-across-generations-in-europe"
    }
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    "Authors: Christine Lagarde",
    "Published: January 24, 2018",
    "Publication and author: Christine Lagarde, January 24, 2018.",
    "Main theme: widening gap between generations in Europe — working-age people, and especially the young, are falling behind despite relatively stable average income inequality since 2007.",
    "Incomes:",
    "Poverty:",
    "Labor market and employment statistics:",
    "Financial vulnerability:",
    "Labor-market dynamics:",
    "Social protection:",
    "Germany:",
    "Portugal:",
    "Primary drivers of intergenerational inequality in focus: income effects from unemployment, labor-market changes (underemployment, temporary work, gig economy), and weakened non-pension social benefits.",
    "Mechanisms:",
    "Labor-market measures:",
    "Social protection reforms:",
    "Tax policy:",
    "Principles:",
    "Risks:",
    "Opportunities:",
    "Message:",
    "[https://www.imf.org/wp-content/uploads/2018/01/eng-jan-24-md-blog1.jpg](https://www.imf.org/wp-content/uploads/2018/01/eng-jan-24-md-blog1.jpg)",
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