Young people and typical working families have seen their incomes fall in real terms compared with a decade ago while average pensioner households have enjoyed an 18% rise, the most detailed study of diverging income patterns across generations will show this week.

The findings will highlight how falling real wages combined with political decisions about who should benefit from public spending have created a sharp divide across age groups, with the young faring worst and pensioners the best.

The study, The State of Living Standards by the Resolution Foundation, will also warn that the trend is set to continue, as further cuts to working-age benefits come into force in the next few years, while pensions are protected.

With the coalition government keen to boast that economic recovery has taken hold, the figures will raise new questions about the extent to which "hard-working families" and young people struggling to make their way will benefit, as an ever expanding elderly population increases its slice of the spending and income cake.

Last month prime minister David Cameron announced that the state pension would continue to rise by at least 2.5% a year until 2020 if the Conservatives won the next election.

Promising to keep the "triple lock" system – which ensures pensions rise by whichever is higher of inflation, wages or 2.5% – Cameron said it was "fair" to prioritise pensions even at a time when benefits for younger people were being slashed.

The RF report – the first of its type to look at inter-generational income patterns across the last decade – finds that the typical income of pensioner households grew from £313 a week in 2001-2 (at 2011-12 prices) to £370 in 2011-12, representing an 18% rise. By contrast, the weekly income of a couple without children in a median working-age household fell slightly from £453 (in 2001-2) to £445 in 2011-12, despite GDP growth of almost 10% over the decade.

For young people, the fall in real wages was even more acute. Between 2001 and 2011, median weekly wages for 18-21 year olds fell by 21.7%, and for 22-29 year olds by 7.6%

James Plunkett, director of policy at the RF, said that while many pensioners were still hard up, and their incomes remained on average below those of working-age families, they had enjoyed a recent good run that looked set to continue.

"The hit to living standards over recent years has been pervasive but there are sharp differences in experience across the generations. The income of the typical working-age family has fallen back to where it was not long after the turn of the millennium," he said.

We must remember that pensioner incomes are still lower on average – and many still live in poverty – but looked at overall, the experience of working-age households has been of a sharp fall in income due to a combination of falling wages and political decisions about who public spending should prioritise.

"Given that there is now a real prospect of wages growing again, even if slowly, the hope is that working families and the young can recover some lost ground. But the scale of the welfare cuts that still lie ahead, which will fall overwhelmingly on less well-off families, will act as a major drag for some years to come."

The report will sharpen political debate over who benefits from welfare, with Labour likely to claim that the Conservatives are giving financial backing to pensioners because they think they are more likely to vote Tory. It will also bring into sharp relief the difficulty young people have in getting into a soaring property market in areas such as the south-east, when their incomes are failing to keep pace.

The report says working incomes will be weakened further by a cap on the annual uprating of many benefits to a below-inflation 1 per cent in 2013, 2014 and 2015 – which will affect working tax credits, child tax credits and child benefit.