Children in the welfare state. A social investment approach

Children occupy centre-stage in any new welfare equilibrium. Failure to support families may produce either of two undesirable scenarios. We shall see a society without children if motherhood remains incompatible with work. A new family policy needs to recognize that children are a collective asset and that the cost of having children is rising. The double challenge is to eliminate the constraints on having children in the first place, and to ensure that the children we have are ensured optimal opportunities. The simple reason why a new social contract is called for is that fertility and child quality combine both private utility and societal gains. And like no other epoch in the past, the societal gains are mounting all-the-while that families’ ability to produce these social gains is weakening.In the following 1 analyze the twin challenges of fertility and child development. I then examine which kind of policy mix will ensure both the socially desired level of fertility and investment in our children? The task is to identify a Paretian optimum that will maximize efficiency gains and social equity simultaneously.

Decentralization and the Welfare State: What Do Citizens Perceive?

Trust in public institutions and public policies are generally perceived as a precondition for economic recovery in times of recession. Recent empirical evidence tends to find a positive link between decentralization and trust. But our knowledge about whether decentralization – through increased trust – improves the perception of the delivery and effectiveness of public policies is still limited. In this paper we estimate the impact of fiscal and political decentralization on the perception of the state of the education system and of health services, by using the 2002, 2004, 2006 and 2008 waves of the European social survey. The analysis of the views of 160,000 individuals in 31 European countries indicates that while the effect of fiscal decentralization on the perception of the state of the health and education system is limited, political decentralization clearly affects citizen’s satisfaction with education and health delivery. The influence of political decentralization, however, is highly contingent on whether we consider the capacity of the local or regional government to exercise authority over its citizens (self-rule) or to influence policy at the national level (shared-rule). Keywords: Education, health, satisfaction, fiscal and political decentralization, Europe. JEL codes: H11, H77

Social spending and demographics: The role of public policies in the intergenerational redistribution of income. Empirical evidence from Spain and Catalonia

The demographic shift underway in Southern Europe requires a revision of some of the fundamental principles of the traditional welfare state. We analyze the evolution of several aspects of welfare and social expenditure over the last two decades. We find that in the context of the present demographic changes and real estate boom current social and pension policy leads to a new distribution of benefits and burdens which is highly intergenerationally unequal. We argue for a revised definition of public policy based on Musgrave's proposition as a possible rule for an intergenerationally fair distribution.

The survival of the welfare state

This paper provides an analytical characterization of Markov perfectequilibria in a politico-economic model with repeated voting, whereagents vote over distortionary income redistribution. The key featureof the theory is that the future constituency of redistributive policiesdepends positively on the current level of redistribution, since thisaffects both private investments and the future distribution of voters.Agents vote rationally and fullly anticipate the effects of their politicalchoice on both private incentives and future voting outcomes. The modelfeatures multiple equilibria. In "pro-welfare" equilibria, both welfarestate policies and their effects on distribution persist forever. In"anti-welfare equilibria", even a majority of beneficiaries ofredistributive policies vote strategically so as to induce the formationof a future majority that will vote for zero redistribution.

Immigration and the survival of the welfare state

This paper analyzes the political sustainability of the welfare state in a model where immigration policy is also endogenous. In the model, the skills of the native population are affected by immigration and skill accumulation. Moreover, immigrants affect future policies, once they gain the right to vote. The main finding is that the long-run survival of redistributive policies is linked to an immigration policy specifying both skill and quantity restrictions. In particular, in steady state the unskilled majority admits a limited inflow of unskilled immigrants in order to offset growth in the fraction of skilled voters and maintain a high degree of income redistribution.Interestingly, equilibrium immigration policy shifts from unrestricted skilled immigration,when the country is skill-scarce, to restricted unskilled immigration, as the fraction of native skilled workers increases. The analysis also suggests a new set of variables that may help explain international differences in immigration restrictions.

Social spending and demographics: The role of public policies in the intergenerational redistribution of income. Empirical evidence from Spain and Catalonia

The demographic shift underway in Southern Europe requires a revision of some of thefundamental principles of the traditional welfare state. We analyze the evolution of several aspects of welfare and social expenditure over the last two decades. We find that in the context of the present demographic changes and real estate boom current social and pension policy leads to a new distribution of benefits and burdens which is highly intergenerationally unequal. We argue for a revised definition of public policy based on Musgrave's proposition as a possible rule for an intergenerationally fair distribution.

Healthy, educated and wealthy : Is the welfare state really harmful for growth?

In this paper, we study how public and private expenditures in health and education affect economic growth by their influence on people's health, abilities, skills and knowledge. We consider a growth accounting framework in order to test whether welfare expenditures more than offset the efficiency losses caused by distortionary taxation, and whether the effects of public expenditure on economic growth differ from those of private expenditure. Our empirical analysis is based on a panel of 19 OECD countries observed between 1971 and 1998. The results are consistent with the hypothesis that the contribution of welfare expenditures more than compensates for the distortions caused by the tax system; and the estimated positive impact is stronger for health than for education. We also find some evidence that public expenditure influences GDP growth more than private expenditure.

Healthy, educated and wealthy : Is the welfare state really harmful for growth?

In this paper, we study how public and private expenditures in health and education affect economic growth by their influence on people's health, abilities, skills and knowledge. We consider a growth accounting framework in order to test whether welfare expenditures more than offset the efficiency losses caused by distortionary taxation, and whether the effects of public expenditure on economic growth differ from those of private expenditure. Our empirical analysis is based on a panel of 19 OECD countries observed between 1971 and 1998. The results are consistent with the hypothesis that the contribution of welfare expenditures more than compensates for the distortions caused by the tax system; and the estimated positive impact is stronger for health than for education. We also find some evidence that public expenditure influences GDP growth more than private expenditure.

The macroeconomic effects of German unification: Real adjustments and the welfare state

We study the effects of German unification in a model with capital accumulation, skill differences and a welfare state. We argue that this event is similar to a mass migration of low-skilled agents holding no capital into a foreign country. Absent a welfare state, we observe an investment boom, depressed output and employment conditions. Capital owners and high-skilled agents are willing to give up to 4% of per-capita consumption to favor unification. When a welfare state exists the investment boom disappears and the recession is prolonged. Now, with unification, capital owners and high-skilled agents lose 4% of per-capita consumption.

Crossing the Rio Grande: Migrations, business cycles and the welfare state

In this paper we study the macroeconomic effects of an inflow oflow-skilled workers into an economy where there is capital accumulation and two types of agents. We find that there are substantial dynamic effects following unexpected migrations with adjustments that resemble those triggered by a sudden disruption of the capital stock. We look at the interrelations between these dynamic effects and three different fiscal systems for the redistribution of income and find that these schemes can change the dynamics and lead to prolonged periods of adjustments. Theaggregate welfare implications are sensitive to the welfare system: while there are welfare gains without redistribution, these gains may be turned into costs when the state engages in redistribution.

Assessing the wellbeing of the Spanish elderly

In this paper we use a variety of data sources, both micro and macro, time series, crosssection, and panel data to provide an empirical evaluation of the current level of economicwellbeing of the Spanish elderly, and of its determinants. We focus, in particular on the role played by the pension system and its generosity in terms of minimum pension supplements and non-contributive pensions. In an IV context, we find that actual Social Security benefits contribute substantially to explain income and consumption poverty levels and trends of low income and consumption percentiles. Thus we offer support to previous evidence for Spain emphasizing the role of minimum benefit policies.

What is the european social model? an aproximation based on Spanish case

The public perception of the EU in Spain varies greatly. The most positive aspects of Spanish membership are associated with the consolidation of democracy, economic growth, the introduction of the euro, the growth in employment and structural and cohesion funds, the increase in the female participation rate, and the equal opportunities policies. The analysts are in favour of common objectives in the employment policy and multi-level government. The less positive aspects of the EU are the risks of losing social protection and loss of employment in some sectors due to mergers of multinationals and delocalization of companies towards Eastern Europe. The continuous demands for reform of the welfare state, the toughening of the conditions of access to social benefit and the reform of the labour market are also seen as problematic issues. Risks of competitive cuts and social dumping.

The determinants of social spending in Spain (1880-1960): Is Lindert right?

[spa] El principal objetivo de este artículo se centra en analizar los orígenes del Estado de Bienestar en España a partir del marco teórico elaborado por Peter Lindert. Con este fin, se ofrece un análisis econométrico de los factores que determinaron la evolución del gasto social público en este país entre 1880 y 1960. Utilizando nueva evidencia cuantitativa, se construyó un panel de datos por quinquenios con el porcentaje de gasto social respecto al PIB desagregado en tres partidas: sanidad, seguridad social y beneficencia. El análisis permite insertar el caso español en el debate internacional y los resultados revelan interesantes singularidades de este país.

The determinants of social spending in Spain (1880-1960): Is Lindert right?

[spa] El principal objetivo de este artículo se centra en analizar los orígenes del Estado de Bienestar en España a partir del marco teórico elaborado por Peter Lindert. Con este fin, se ofrece un análisis econométrico de los factores que determinaron la evolución del gasto social público en este país entre 1880 y 1960. Utilizando nueva evidencia cuantitativa, se construyó un panel de datos por quinquenios con el porcentaje de gasto social respecto al PIB desagregado en tres partidas: sanidad, seguridad social y beneficencia. El análisis permite insertar el caso español en el debate internacional y los resultados revelan interesantes singularidades de este país.