Welfare state dynamics

The goal in the present paper is twofold, to shed some light on endogenous dynamic of the welfare states, and to provide a procedure to select among several equilibria. To this end, a dynamic model is presented, in which private agents are assumed to be "locked" to current decisions for a while. If "frictions" are large enough, the economy might exhibit more than one stable Paretorankable stationary state. Equilibrium paths would then be determined by history. The economy might become "stuck" at an inferior stationary state, with too much insurance and too little effort.

The Welfare State, Thresholds, and Economic Growth

Can a growing welfare state induce a regime switch in the growth rate of an econ-omy? This paper constructs a dynamic political economy model of economic growth and the welfare state in which both variables are non-linearly related and jointly en-dogenous. Using a Markov switching framework over the period 1950-2001, we find that the structural decline in growth rates that several welfare state economies expe-rienced during 1970-1975 are preceded by movements to a high welfare state regime. This suggests that expanding welfare state regimes are associated with low economic growth regimes, while contracting welfare state regimes are associated with high growth regimes. However, we also find that the structural decline in growth rates leads to a downward structural break in the welfare state for many welfare state economies. This suggests that declining growth regimes are associated with contracting welfare state regimes, as lower growth forces politicians to cut the size of the welfare state. We also report strong evidence that both expansion and contractions in the welfare state affects growth non-linearly. These results are able to characterize a predictable and general pattern of welfare state-growth evolution.Welfare state; Structural change; Regime switching models; Positive political economy; Endogenous growth

Inattentive Voters and Welfare-State Persistence

Welfare-state measures often tend to persist even when they seem to have become suboptimal due to changes in the economic environment. This paper proposes an information-based explanation for the persistence of the welfare state. I present a structural model where rationally inattentive voters decide upon implementations and removals of social insurance. In this model, welfare-state persistence arises from disincentive effects of social insurance on attentiveness. The welfare state crowds out private financial precautions and with it agents‘ attentiveness to changes in economic fundamentals. When welfare-state arrangements are pronounced, agents realize changes in economic fundamentals later and reforms have considerable delays.Welfare state; voting; imperfect information

Social Security Act of 1935 to TANF: A Comprehensive Look at the History and Current State of Welfare in America

This study seeks to explore the welfare system within the United States. The study spans from the Great Depression to the current state of TANF, post-welfare reform, to better understand the current state of welfare within the United States in order to analyze the need for further welfare reform. The initial disparities in the system, from the very beginning, are worth analyzing because it provides a framework to understand how disparities could possibly exist in the program today. Social Policy Programs are systems that have been built from multiple policies and components over time. Faulty, systematic issues, must be evaluated from the ground up in order to analyze how these methods have transpired throughout the program over time. Therefore, understanding the state of welfare from inception to present day is imperative to understanding its current state, as well as further reformations needed

Immigration policy and welfare state design; a qualitative approach to explore the interaction

For the design of an immigration policy, in terms of the number and skills of the entrants and their effect on the host country, it is important to realize that the kind of welfare state matters. This study confronts three possible labour migration regimes - a temporary, an open and a selective regime - with two possible welfare state settings - a highly redistributive and a hardly redistributive welfare state. By comparing the likely outcomes between the different regimes, and by taking possible effects on the self-selection of immigrants into account, the study draws the following conclusions. First, both labour migration policy and the welfare state matter for the skill composition of labour migrants. Second, to be attractive for high-skilled labour migrants a highly distributive welfare state needs to undo its discouraging effect on these migrants. Third, a highly redistributive welfare state is attractive for low-skilled labour migrants. Because these migrants may become costly for such a welfare state once they manage to stay permanently, one should be careful with the introduction of temporary migration policies for the low-skilled.

An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale

Does the supply of a welfare state create its own demand? Many economic scholars studying welfare arrangements refer to Say's law and insinuate a self-destructive welfare state. However, little is known about the empirical validity of these assumptions and hypotheses. We study the dynamic effect of different welfare arrangements on benefit fraud. In particular, we analyze the impact of the welfare state on the respective social norm, i.e. benefit morale. It turns out that a high level of public social expenditures and a high unemployment rate are associated with a small positive (or no) immediate impact on benefit morale, which however is crowded out by adverse medium and long run effects.benefit morale, benefit fraud, social norms, welfare state

Dignity and the Burden of the Welfare State

The burden of the welfare state may be analysed from an economic as well as a more normative perspective. This paper attempts to do both things. By the use of the case of Sweden the expansion and the costs of the welfare state is described, partly in international comparison, and explained, largely in terms of unintended consequences. Special attention is given to the effects of taxes. Next, the concept of dignity is explicated and used to evaluate the Swedish welfare state. The overall conclusion is that the burden of the welfare state is high indeed, both in economic terms and from the perspective of human dignity. Consequently, if we want to promote economic efficiency, growth and dignity the size of the state should be radically decreased.welfare state; taxes; efficiency; welfare; dignity

Generational conflict, consumption and the ageing welfare state in the United Kingdom

The British welfare state is over 60 years old. Those who were born, grew up and who are now growing old within its ambit are a distinctive generation. They have enjoyed healthier childhoods with better education that previous populations living in Britain. That they have done well under the welfare state is accepted, but some critics have argued that these advantages are at the expense of younger cohorts. The very success of the ‘welfare generation’ is perceived as undermining the future viability of the welfare state. Current levels of income and wealth enjoyed by older cohorts can only be sustained by cutbacks in entitlements for younger cohorts. This will leads to a growing ‘generation fracture’ over welfare policy. This paper challenges this position, arguing that both younger and older groups find themselves working out their circumstances in conditions determined more by the contingencies of the market than by social policy

Turning inside out?: Globalization, neo-liberalism and welfare states

Apocalyptic accounts of globalization bringing about the end of the welfare state (and the nation state) have been countered by political-institutionalist views of adaptation. Such views treat globalization as an external force, or pressure, rather than a set of processes that are also internalized within nations. I argue that a more differentiated view of globalization can reveal how it has unsettled welfare state/nation-state formations. In the process, taken-for-granted meanings and boundaries of nation-state-welfare have been destabilized. I conclude by suggesting that these processes have made citizenship a distinctive focus of political tensions and conflicts

Welfare State Regress in Western Europe: Politics, Institutions, Globalization and Europeanization

In interdisciplinary research on welfare state regress in Western Europe, interest has focused on the causes and extent of retrenchment. Causal debates have concerned the role of globalization, post-industrialism, European integration, and partisan politics. The "new politics" perspective views pressures towards retrenchment as basically generated by post-industrial changes causing government budget deficits and permanent austerity, developments pressing all governments to attempt to cut welfare state programs. These attempts are resisted by powerful interest groups consisting of welfare state benefit recipients, and therefore retrenchment is likely to be a limited phenomenon. Such recipient-based interest groups generated by welfare states are seen as largely replacing left parties and unions once driving welfare state expansion, thus marginalizing the role of class-related politics in the retrenchment process. Conclusions pointing to only limited retrenchment and a minor role for partisan politics have been criticized because of the non-theoretical definition of the welfare state and because of the concentration on social expenditures. The power resources approach, focusing on the role of distributive conflicts between major interest groups for welfare states development, widens the theoretical definition of the welfare state to include full employment as well as social transfers and expenditures. In Western Europe full employment was one of the cornerstones of the postwar "Keynesian welfare state," entailing a social contract which markedly differed from the one in the United States. The return of mass unemployment in Europe since the mid-1970s constitutes a major welfare state regress, and at the same time generates government budget deficits and austerity. Analyses based on citizenship rights in social insurance programs indicate major retrenchment in some West European countries, with political parties and welfare state institutions in significant roles. In this perspective the return of mass unemployment and cuts in social rights appear as a reworking of the European post-war social contract. The widening of the scope of welfare state indicates that trans-nationalization may have differing effect on its different aspects.welfare state retrenchment; globalization; European Union; partisan politics; unemployment.