Element contents
Series: Elements in Public Economics
Welfare States
Achievements and Threats
Published online by Cambridge University Press: 06 December 2018
Summary
The traditionally, and wrongly, imagined vulnerabilities of the welfare state are economic. The true threats are demographic and political. The most frequently imagined threat is that the welfare state package reduces the level and growth of GDP. It does not, according to broad historical patterns and non-experimental panel econometrics. Large-budget welfare states achieve a host of social improvements without any clear loss of GDP. This Element elaborates on how this 'free lunch' is gained in practice. Other threats to the welfare state are more real, however. One is the rise of anti-immigrant backlash. If combined with heavy refugee inflows, this could destroy future public support for universalist welfare state programs, even though they seem to remain economically sound. The other is that population aging poses a serious problem for financing old age. Pension deficits threaten to crowd out more productive social spending. Only a few countries have faced this issue well.
Information
- Type
- Element
- Information
- Series: Elements in Public EconomicsOnline ISBN: 9781108565431Publisher: Cambridge University PressPrint publication: 03 January 2019
References
AARP. 2017. Politics and Aging Fact Sheet. https://assets.aarp.org/www.aarp.org_/articles/.Google Scholar
Agell, Jonas, Lindh, T., and Ohlsson, H.. 1999. “Growth and the Public Sector: A Reply.” European Journal of Political Economy 15: 359–366.CrossRefGoogle Scholar
Alesina, Alberto, Miano, Armando, and Stantcheva, Stefanie. 2018. “Immigration and Redistribution.” NBER Working Paper No. 24733 (July).10.3386/w24733CrossRefGoogle Scholar
Baldwin, Peter. 1990. The Politics of Social Solidarity and the Bourgeois Basis of the European Welfare State, 1875–1975. Cambridge: Cambridge University Press.Google Scholar
Bakija, Jon, Kenworthy, Lane, Lindert, Peter, and Madrick, Jeffrey. 2016. How Big Should Our Government Be? Berkeley: University of California Press.Google Scholar
Blau, Francine. 2012. The Economics of Women, Men, and Work, 6th edition. Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Boeri, Tito. 2010. “Immigration to the Land of Redistribution.” Economica 77, 308 (October): 651–687.10.1111/j.1468-0335.2010.00859.xCrossRefGoogle Scholar
Boubtane, Ekrame, Dumont, Jean-Christophe, and Rault, Cristophe. 2015. “Immigration and Economic Growth in the OECD Countries 1986–2006.” CESifo Working Paper Series No. 5392.CrossRefGoogle Scholar
Burn-Murdoch, John. 2017. “Youth Turnout at General Election Highest in 25 Years, Data Show.” Financial Times, June 19.Google Scholar
Carneiro, Pedro and Heckman, James. 2003. “Human Capital Policy.” In Heckman, James and Krueger, Anne (eds.), Inequality in America: What Role for Human Capital Policies? Cambridge, MA: MIT Press.Google Scholar
Castle, Francis G. and Dowrick, Steve. 1990. “The Impact of government Spending Levels on Medium-term Economic Growth in the OECD, 1960–1985.” Journal of Theoretical Politics 2: 173–204.10.1177/0951692890002002003CrossRefGoogle Scholar
Commander, Simon, Davoodi, Hamid R., and Lee, Une J.. 1997. “The Causes of Government and the Consequences for Growth and Well-Being.” World Bank Policy Research Working Paper 1785. World Bank (June).Google Scholar
Costa, Dora L. 1998. The Evolution of Retirement: An American Economic History, 1880- 1990. Chicago: University of Chicago Press.10.7208/chicago/9780226116228.001.0001CrossRefGoogle Scholar
Cutler, David M. and Ly, Dan P.. 2011. “The (Paper)Work of Medicine: Understanding International Medical Costs.” Journal of Economic Perspectives 25, 2 (Spring): 3–25.10.1257/jep.25.2.3CrossRefGoogle ScholarPubMed
de la Maisonneuve, Christine, and Martins, Joaquim Oliveira. 2013. “Public Spending on Health and Long-term Care: A New Set of Projections.” OECD Economic Policy Papers No. 6.Google Scholar
Dustmann, Christian and Preston, Ian P.. 2007. “Racial and Economic Factors in Attitudes to Immigration.” Berkeley Electronic Journal of Economic Analysis & Policy 7, 1, Advances, Article 62.Google Scholar
Easterly, William and Rebelo, Sergio. 1993. “Fiscal Policy and Economic Growth.” Journal of Monetary Economics 32: 417–458.10.1016/0304-3932(93)90025-BCrossRefGoogle Scholar
Edebalk, Gunnar. 2010. “Ways of Funding and Organizing Elderly Care in Sweden.” In Bengtsson, Tommy (ed.), Population Ageing: A Threat to the Welfare State? Berlin and Heidelberg: Springer-Verlag, pp. 65–80.10.1007/978-3-642-12612-3_5CrossRefGoogle Scholar
Eggleston, Karen N. and Fuchs, Victor R.. 2012. “The New Demographic Transition: Most Gains in Life Expectancy Now Realized Late in Life.” Journal of Economic Perspectives 26, 3 (summer): 137–156.10.1257/jep.26.3.137CrossRefGoogle ScholarPubMed
Fölster, S. and Henrekson, M.. 1998. “Growth and the Public Sector: A Critique of the Critics.” European Journal of Political Economy 15 (June): 337–358.10.1016/S0176-2680(99)00010-5CrossRefGoogle Scholar
Garfinkel, Irwin, Rainwater, Lee, and Smeeding, Timothy M.. 2010. Wealth and Welfare States: Is America a Laggard or Leader? Oxford: Oxford University Press.Google Scholar
Gemmell, Norman, Kneller, Richard and Sanz, Ismael. 2011. “The Timing and Persistence of Fiscal Policy Impacts on Growth: Evidence from OECD Countries.” Economic Journal 121 (February): F33–F58.10.1111/j.1468-0297.2010.02414.xCrossRefGoogle Scholar
Hansson, P. and Henrekson, M. 1994. “A New Framework for Testing the Effects of Government Spending on Growth and Productivity.” Public Choice 81, 3–4 (December): 381–401.10.1007/BF01053239CrossRefGoogle Scholar
Hoynes, Hilary and Schanzenbach, Diane Whitmore. 2018. “Safety Net Investments in Children.” NBER Working Paper 24594 (May).10.3386/w24594CrossRefGoogle Scholar
Kato, Junko. 2003. Regressive Taxation and the Welfare State: Path Dependence and Policy Diffusion. Cambridge: Cambridge University Press.10.1017/CBO9780511510212CrossRefGoogle Scholar
Korpi, Walter. 1985. “Economic Growth and the Welfare System: Leaky Bucket or Irrigation System?” European Sociological Review 1: 97–118.10.1093/oxfordjournals.esr.a036387CrossRefGoogle Scholar
Kotlikoff, Laurence J. and Hagist, Christian. 2005. “Who’s Going Broke? Comparing Healthcare Costs in Ten OECD Countries.” NBER Working Paper 11833 (December).Google Scholar
Kneller, Richard, Bleaney, Michael, and Gemmell, Norman. 1999. “Fiscal Policy and Growth: Evidence from OECD Countries.” Journal of Public Economics 74, 2 (November): 171–190.10.1016/S0047-2727(99)00022-5CrossRefGoogle Scholar
Knuse, Agneta. 2010. “A Stable Pension System: The Eighth Wonder.” In Bengtsson, Tommy (ed.), Population Ageing: A Threat to the Welfare State? Berlin and Heidelberg: Springer-Verlag, pp. 47–64.Google Scholar
Landau, Daniel L. 1985. “Government Expenditure and Economic Growth in the Developed Countries.” Public Choice 47, 3: 459–478.10.1007/BF00182148CrossRefGoogle Scholar
Lee, Ronald D. and Miller, Timothy, 2000. “Immigration, Social Security, and Broader Fiscal Impacts.” American Economic Review 90, 2 (May): 350–354.10.1257/aer.90.2.350CrossRefGoogle Scholar
Lindert, Peter H. 1994. “The Rise of Social Spending, 1880–1930.” Explorations in Economic History 31, 1 (January): 1–37.CrossRefGoogle Scholar
Lindert, Peter H. 2004. Growing Public: Social Spending and Economic Growth since the Eighteenth Century. Two volumes. Cambridge: Cambridge University Press.Google Scholar
Lindert, Peter H. 2017. “The Rise and Future of Progressive Redistribution.” Commitment to Equity (CEQ) Institute, Tulane University, Working Paper 73 (October). An earlier version was presented as the Fifth Angus Maddison Lecture, OECD, Paris, 4 October 2017.Google Scholar
Lynch, Julia. 2001. “The Age-Orientation of Social Policy Regimes in OECD Countries.” Journal of Social Policy 30, 3: 411–436.10.1017/S0047279401006365CrossRefGoogle Scholar
Lynch, Julia. 2006. Age in the Welfare State. Cambridge: Cambridge University Press.10.1017/CBO9780511606922CrossRefGoogle Scholar
McCallum, John and Blais, ré. 1987. “Government, Special Interest Groups, and Economic Growth.” Public Choice 54, 1: 3–18.CrossRefGoogle Scholar
Mendoza, Enrique G., Milesi-Ferretti, Gian Maria, and Asea, Patrick. 1997. “On the Ineffectiveness of Tax Policy in Altering Long-Run Growth: Harberger’s Superneutrality Conjecture.” Journal of Public Economics 66, 1 (October): 99–126.10.1016/S0047-2727(97)00011-XCrossRefGoogle Scholar
Migration Advisory Committee, United Kingdom. 2018. EEA Migration into the UK: Final Report (September). https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/741926/Final_EEA_report.PDF .Google Scholar
Nozaki, Masahiro, Kashiwase, Kenichiro, and Saito, Ikuo. 2014. “Health Spending in Japan: Macro-Fiscal Implications and Reform Options.” IMF Working Paper WP/14/142 (August).10.5089/9781498365277.001CrossRefGoogle Scholar
Organisation for Economic Cooperation and Development (OECD). 1985. Social Expenditure 1960–1990. Paris: OECD.Google Scholar
OECD. 2008. Growing Unequal? Income Distribution and Poverty in OECD Countries. Paris: OECD.Google Scholar
OECD. 2018. “The Future of Social Protection: What Works for Non-Standard Workers?” Policy Brief on the Future of Work (May). www.oecd.org/employment/future-of-work.htm.Google Scholar
OECD, forthcoming. The Future of Social Protection: What Works for Non-Standard Workers? Paris: OECD.Google Scholar
Peri, Giovanni. 2016. “Immigrants, Productivity, and Labor Markets.” Journal of Economic Perspectives 30, 4 (Fall): 1–30.10.1257/jep.30.4.3CrossRefGoogle Scholar
Persson, Torsten and Tabellini, Guido. 1994. “Is Inequality Harmful for Growth?” American Economic Review 84, 3 (June): 600–621.Google Scholar
Pestieau, Pierre. 2006. The Welfare State in the European Union: Economic and Social Perspectives. Oxford: Oxford University Press.Google Scholar
Portes, Jonathan and Forte, Giuseppe. 2017. “The Economic Impact of Brexit-Induced Reductions in Migration.” Oxford Review of Economic Policy 33, Issue suppl 1 (1 March): S31–S44, as a pdf file (working paper) accessed via www.niesr.ac.uk, June 15, 2018.10.1093/oxrep/grx008CrossRefGoogle Scholar
Preston, Ian. 2014. “The Effect of Immigration on Public Finances.” Economic Journal 124, 580, Feature Issue (November): F569–F592.CrossRefGoogle Scholar
Psacharapoulos, George and Patrinos, Harry Anthony. 2004a. “Returns to Investment in Education: A Further Update.” Education Economics 12, 2 (August): 111–134.10.1080/0964529042000239140CrossRefGoogle Scholar
Psacharapoulos, George, and Patrinos, Harry Anthony. 2004b. “Human Capital and Rates of Return.” In Johnes, Geraint and Johnes, Jill (eds.), International Handbook on the Economics of Education. Cheltenham: Edward Elgar, pp. 1–57.Google Scholar
Reinhardt, Uwe E. 2000. “Health Care for the Aging Baby Boom: Lessons from Abroad.” Journal of Economic Perspectives 14, 2 (Spring): 71–84.10.1257/jep.14.2.71CrossRefGoogle ScholarPubMed
Scruggs, Lyle and Allan, James. 2005. “The Material Consequences of Welfare States: Benefit Generosity and Absolute Poverty in 16 OECD Countries.” Luxembourg Income Study Working Paper No. 409 (April).Google Scholar
Slemrod, Joel and Bakija, Jon. 2004. Taxing Ourselves: A Citizen’s Guide to the Debate over Taxes. 3rd edition. Cambridge: MIT Press.Google Scholar
Smeeding, Timothy. 2006. “Poor People in Rich Nations: The United States in Comparative Perspective.” Journal of Economic Perspectives 20, 1 (Winter): 69–90.10.1257/089533006776526094CrossRefGoogle Scholar
Smith, Adam. 1766. Lectures on Jurisprudence. Edited by Meek, R. L., Raphael, D. D., and Stein, P.G.. Oxford: Clarendon Press (1978).Google Scholar
Solijonov, Abdurashid. 2016. Voter Turnout Trends around the World. Stockholm: International Institute for Democracy and Electoral Assistance.Google Scholar
Starr, Paul. 1982. The Social Transformation of American Medicine. New York: Basic Books.Google Scholar
Thomasson, Melissa A. 2002. “From Sickness to Health: The Twentieth Century Development of U.S. Health Insurance.” Explorations in Economic History 39, 3: 233–253.10.1006/exeh.2002.0788CrossRefGoogle Scholar
Thomasson, Melissa A. 2003. “The Importance of Group Coverage: How Tax Policy Shaped U.S. Health Insurance.” American Economic Review, 93, 4 (September), 1373–1384.10.1257/000282803769206359CrossRefGoogle ScholarPubMed
United States Centers for Medicare and Medicaid Services. 2012. www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Age-and-Gender.html, accessed May 30, 2018.Google Scholar
United States Elections Project. Ongoing. www.electproject.org/home/voter-turnout/demographics.Google Scholar
Wadsworth, Jonathan, Dhingra, Swati, Ottaviano, Gianmarco, and John, Van Reenen. 2016. “Brexit and the Impact of Immigration on the UK.” Brexit Analysis No. 5, Centre for Economic Performance. http://cep.lse.ac.uk/pubs/download/brexit05.pdf.Google Scholar
Wang, Chen, Caminada, Koen, and Goudswaard, Kees. 2012. “The Redistributive Effect of Social Transfer Programmes and Taxes: A Decomposition across Countries.” International Social Security Review 65, 3: 27–48.10.1111/j.1468-246X.2012.01435.xCrossRefGoogle Scholar
Weede, Erich. 1991. “The Impact of State Power on Economic Growth Rates in OECD Countries.” Quality and Quantity 25, 4 (November): 421–438.10.1007/BF02484590CrossRefGoogle Scholar
Woodlander, Steffie, Campbell, Terry, and Himmelstein, David U.. 2003. “Costs of Health Care Administration in the United States and Canada.” New England Journal of Medicine 349, 8 (August 21): 768–775.Google Scholar
Wolfinger, Raymond E. and Rosenstone, Steven J.. 1980. Who Votes? New Haven: Yale University Press.Google Scholar
Accessibility standard: Unknown
Why this information is here
This section outlines the accessibility features of this content - including support for screen readers, full keyboard navigation and high-contrast display options. This may not be relevant for you.Accessibility Information
Accessibility compliance for the HTML of this element is currently unknown
and may be updated in the future.
- 6
- Cited by