2. Family activities and social security
Activities of families regarding social security are manifold. First of all there are activities as
intrafamily social security. Family members are supplying support for other members of the
family for example in case of illness, in old age or when long-term care is needed. This often
are transfers in kind like nursing and providing food in case of illness etc. But there can also
be transfers in cash.
There are transfers within one generation - for example between husbands - and between
generations, from the young to the old but also vice versa. The empirical information on
intrafamily transfers in cash as well as in kind are often incomplete and less well documented
compared to activities that are linked to formal social security schemes and arrangements.
The expression formal social security is used here for those arrangements and activities that
are not realised within the (extended) family.
Intrafamily social security can reduce the demand for formal activities as well as the need to
collect taxes or social insurance contributions to finance formal activities in case of health
care etc. (see Overview 1). But one has to take into consideration that intrafamily transfers
are not without costs. This should be borne in mind when a shift from formal schemes
towards the family is proposed based on the fact that this can avoid an increase in taxes or
contributions. The same is true when a reduction in public schemes is linked to a shift
towards private arrangements like in health care or in pensions. The public debate is often
focused on the fiscal effects, especially the burden for public budgets, neglecting the
additional burden in cash or in kind for private households resulting from a shift from public to
private provision.
Regarding the link between formal social security arrangements and families it is useful to
distinguish several aspects:
(a) a cross-sectional as well as a longitudinal perspective,2
(b) how families are contributing to social security schemes (in cash and/or in kind) and what
they receive from the schemes,
(c) whether the social security schemes are public or private,
(d) financed in a PAYGO financed or capital funded scheme and
(e) whether financing (collecting revenue) is by insurance premiums, by social insurance
contributions or by taxes.
Obviously these are also dimensions that are relevant for characterising the concept of social
security and in particular social insurance schemes.
2 This, among other things, is relevant in the topic discussed below regarding externalities of
raising children in PAYGO and capital funded (pension) schemes.