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The Middle Classes and the Welfare State under Conservative and Labour Governments

  • Julian Le Grand (a1) and David Winter (a2)

The Conservative Government elected in Britain in 1979 wished to change the extent and pattern of government expenditure. We use econometric techniques to investigate whether it did so in the period up to 1984, concentrating attention on the welfare state. We also test the hypothesis that the observed changes favoured the middle classes. After discussing the channels by which the middle classes influence government policy, a model of government behaviour is outlined. The theoretical model indicates the forms of specification error that we might expect in our econometric results, which, in turn, suggest that the Conservatives tended to favour the middle classes, while the previous Labour administrations did not. However, the estimates for the Labour period appear to be misspecified, but those for the Conservative period survived tests of misspecification.

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T. S. Breusch and A. R. Pagan (1979), ‘A simple test of heteroscedasticity and random coefficient variation’, Econometrica 47, 12871294.

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J. P. Dunne , P. Pashardes and R. P. Smith (1984), ‘Needs, costs and bureaucracy: the allocation of public consumption in the UK’, Economic Journal 94, 115.

J. Le Grand and D. Winter (1977), ‘Towards an economic model of local government behaviour’, Policy and Politics, 5, 2329.

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R. P. Smith (1980), ‘The demand for military expenditure’, Economic Journal 90, 811821.

H White . (1980), ‘A heteroskedasticity-consistsent covariance matrix estimator and a direct test of heteroskedasticity’, Econometrica 48, 817838.

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Journal of Public Policy
  • ISSN: 0143-814X
  • EISSN: 1469-7815
  • URL: /core/journals/journal-of-public-policy
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