The economics of organized crime and optimal law enforcement

This article extends the optimal law enforcement literature to organized crime. I model the criminal organization as a vertical structure where the principal extracts some rents from the agents through extortion. As long as extortion is a costless transfer from individuals to the criminal organization, not only the existence of extortion is social welfare improving because it makes engaging in a criminal offense less attractive but it also allows the government to reduce expenditures on law enforcement. When extortion is costly because the criminal organization resorts to threats and violence, the existence of extortion is social welfare diminishing and may lead to higher expenditures on law enforcement.     

THE OPTIMAL TAXATION OF ASSET INCOME WHEN GOVERNMENT CONSUMPTION IS ENDOGENOUS: THEORY,ESTIMATION AND WELFARE

This paper derives the Ramsey optimal fiscal policy for taxing asset income in a model where government expenditure is a function of net output or the inputs that produce it. Extending work by Kenneth L. Judd, I demonstrate that the canonical result that the optimal tax on capital income is zero in the medium to long term is a special case of a more general model. Employing a vector error correction model to estimate the relationship between government consumption and net output or the factor inputs that generate it for the United States between 1948Q1 and 2015Q4, I demonstrate that this special case is empirically implausible, and show how a cointegrating vector can be used to determine the optimal tax schedule. I simulate a version of the model using the empirical estimates to measure the welfare implications of changing the tax rate on asset income, and contrast these results with those generated in a version of the model where government consumption is purely exogenous. The shifting pattern of welfare measurements confirms the theoretical results. I calculate that the prevailing effective tax rate on net asset income in the United States between 1970 and 2014 averaged 0.449. Hence abolishing the tax completely does generate welfare improvements, though only by the equivalent of between 1.103% and 1.616% permanent increase in consumption—well under half the implied welfare benefit when the endogeneity of the government consumption is ignored. The maximum welfare improvement from shifting part of the burden of tax from capital to labor is the equivalent of a permanent increase in consumption of between only 1.491% and 1.858%, and is attained when the tax rate on asset income is lowered to between 0.148 and 0.186. Allowing the tax rate to vary over time raises the maximum welfare benefit to 1.865%. All the results are very robust to a wide range of elasticities of labor supply. (JEL E62, H21, H50)     

The role of voluntary organizations in the care of the elderly in Norway

This paper describes the contributions of voluntary organizations to the provision of social services for the elderly in Norway. It presents data on the volume of social services provided by Norwegian voluntary organizations and discusses the recognition that the central government gives to such organizations, as well as the conditions for supporting voluntary organizations in the Norwegian welfare state. The analysis indicates the scope of the contributions made by these organizations in caring for older people. Though the size of contributions made by the voluntary organizations has been declining rapidly in recent years, the Norwegian government still recognizes their past contributions and the role they can play within the framework of the welfare state's social services for the aged.     

Public opinion and the privatization of welfare: some theoretical implications

The social policy of the Thatcher government is characterized by an abrupt shift in the direction of the private sector. To what extent does this reflect what people want? The Institute of Economic Affairs conclude from the only suitable national opinion survey that such a move is strongly supported. Our reanalysis of their data shows that this strand in public opinion can coexist with, and need not contradict, an equal public enthusiasm for state welfare. Such results have important implications for our understanding of social policy. We conclude, therefore, with a discussion of contrasting marxist and liberal accounts which seeks to show that the evidence of ambivalence in popular attitudes about the welfare state supports particular developments in theory.     

Social policy in Hong Kong: From British colony to Special Administrative Region of China

This paper discusses the preservation and change of social policy in Hong Kong in the process of its development from a British colony to a Special Administrative Region of China (SAR). It is argued by the authors that the role and strategy of the colonial government in social policy and social welfare seem to have been largely preserved by the new SAR government which advocates for a new vision for social development. It is also argued that without a democratic mandate, the SAR government continues to rely on stimulating economic output as a primary means to gain legitimation, while social policy and social welfare remain to be subordinated to economic growth. Traditional Chinese values continue to be upheld by the SAR government not only as a means to contain social welfare cost, but also as an instrument to strengthen social control. What is different between the colonial and the SAR regimes is perhaps the increasingly strategic position of Hong Kong as a window of China to the global economy.     

Race,Class, and Support for the Welfare State*

Two competing approaches to the study of African Americans—the race and class perspectives—have dominated attempts to explain their views on contemporary issues. To examine the race versus class debate, this study uses African Americans' views on government spending for five social welfare concerns: (1) improving and protecting the nation's health, (2) solving the problems of big cities, (3) halting rising crime rates, (4) dealing with drug addiction, and (5) improving the nation's education system. Data from the 1972–1990 General Social Surveys are used to compare middle-class blacks with both working-class blacks and whites and middle-class whites in terms of their support for government spending for those five social welfare issues. Examining group means, we found no significant difference between the two black classes but a significant difference between the black middle class and the white middle class on support for government spending in all areas except halting the rising crime rates (where there were no significant differences among the four groups). Similarly, using logistic regression analysis we found that race continued to have a significant effect on support for spending even after controlling for class, year, age, gender, education, income, and occupational prestige. In respect to social welfare spending, the results indicate support for the race, as opposed to the class, perspective; that is, race is better than class for predicting African American attitudes on government spending.     

Even the underprivileged are rational: The incentive effects of welfare

Tanner and Moore (1995) calculate welfare equivalent wages for the six most common social programs for each of the 50 states and the District of Columbia. They assert that individuals who choose public assistance over work are responding rationally to incentives of the welfare system, but they offer no evidence. I present statistically significant support for Tanner and Moore’s assertion. Among potential welfare recipients, a one dollar increase in the welfare equivalent wage is found to increase the welfare take-up rate by approximately 2.7 percentage points and decrease the labor force participation rate by approximately 2.5 percentage points. I thank John Dawson, Don Nimey, Michelle W. Trawick, and an anonymous referee for helpful comments. The usual caveat applies.     

Neo-isolationism,balanced-budget conservatism,and the fiscal impacts of immigrants

"A rise in neo-isolationism in the United States has given encouragement to a new fiscal politics of immigration. Growing anti-immigrant sentiment has coalesced with forces of fiscal conservatism to make immigrants an easy target of budget cuts. Limits on legal alien access to social welfare programs that are contained in the 1996 welfare and immigration reform acts seem motivated not so much by a guiding philosophy of what it means to be a member of American society as by a desire to shrink the size of the federal government and to produce a balanced budget. Even more than in the past, the consequence of a shrinking welfare state is to metamorphose legal immigrants from public charges to windfall gains for the federal treasury."     

Systems Theory and Organization Change: A Case Study

A case study of a social welfare agency demonstrates that this organization can control its development as an autonomous system and need not merely shift with the times in response to the changing involvement of the federal government in social welfare programs. A theoretical framework of organizational change utilizes Parson's AGIL for this analysis.     

Tax–benefit revealed social preferences

This paper inverts the usual logic of applied optimal income taxation. It starts from the observed distribution of income before and after redistribution and corresponding marginal tax rates. Under a set of simplifying assumptions, it is then possible to recover the social welfare function that would make the observed marginal tax rate schedule optimal. In this framework, the issue of the optimality of an existing tax–benefit system is transformed into the issue of the shape of the social welfare function associated with that system and whether it satisfies elementary properties. This method is applied to the French redistribution system with the interesting implication that the French redistribution authority may appear, under some plausible scenario concerning the size of the labor supply behavioral reactions, non Paretian (e.g. giving negative marginal social weights to the richest class of tax payers).     

Empirical evidence on preference formation

To explain the empirical fact that different individuals have different individual welfare functions, a theory of preference formation has been developed by the first author. The theory essentially states that an individual's welfare function is identical to the distribution of consumption patterns the individual has observed over time. This includes both his own consumption and the consumption by others in his social reference group. The paper reviews the evidence collected with respect to directly measured individual welfare functions in Europe. Evidence obtained in related research by economists, psychologists, and sociologists is also discussed.     

Income Inequality,Globalization, and the Welfare State: Evidence from 23 Industrial Countries, 1990–2009

The debate regarding the welfare state–weakening effect and the income inequality‐increasing effect of globalization remains a contentious issue among stratification scholars. For some, globalization increases income inequality, while for others, globalization has no, or a negligible, effect on income inequality. This study brings new evidence to bear on this debate by separately investigating effects of multiple indicators of globalization (international trade, foreign direct investment [FDI] and immigration), and of welfare state generosity (government social‐protection spending) on (1) income inequality before taxes and transfers and (2) income inequality after taxes and transfers, using data from 23 Organisation for Economic Co‐operation and Development (OECD) countries over 1990–2009. First, results show a positive effect of international trade, a negative effect of immigration, but no effect of FDI and government social‐protection spending on income inequality before taxes and transfers. Second, results show no effect of the globalization indicators but a negative effect of government social‐protection spending on income inequality after taxes and transfers. These findings suggest that (1) globalization has inequality‐increasing effects depending on measures of income inequality; (2) the welfare state, in many OECD countries, continues to shape income distribution; and (3) in contrast with the popular narrative, immigration may decrease income inequality.     

Explaining the United States’ Penal Exceptionalism: Political,Economic, and Social Factors

In this review, I examine explanations for why the United States is a world leader in its use of imprisonment. I first outline cross‐national trends in incarceration and then evaluate the state of the literature and empirical evidence for why the United States is more punitive than other advanced industrialized nations. I argue a confluence of political, economic, and social factors distinct to the United States context are implicated in the punitive turn in the 1970s. Specifically, United States’ penal exceptionalism is the result of (1) a shift of criminal justice policy from the judicial to the legislative branch of government; (2) political responses to social and economic changes including deindustrialization and the upheaval of race relations in the 1960s; and (3) a weak welfare state. These changes stand in stark contrast to the dynamics of criminal justice policymaking among comparable nations. However, there is a need for more comparative research on the topic, as understanding the mechanism behind the stabilization or decrease of penal populations in other countries may better elucidate the reasons for America’s divergence from international trends.     

THE OPTIMAL GOVERNMENT SIZE: FURTHER INTERNATIONAL EVIDENCE ON THE PRODUCTIVITY OF GOVERNMENT SERVICES

This paper estimates the optimal government size for several sets of economies by investigating the role of public services in the production process. I assume government services are optimally provided when their marginal product equals unity (the "Barro rule"). The empirical results suggest: (1) government services are significantly productive; (2) they are overprovided in Africa, underprovided in Asia, and optimally provided everywhere else; (3) the optimal government size is 23 percent for the average country but ranges from 14 percent for the average OECD country to 33 percent in South America; and (4) the marginal productivity of government services is negatively related to government size.     

Interpersonal Helping Skills,by Eldon K. Marshall,P. David Kurtz,and Associates. Jossey-Bass Publishers,San Francisco, 1982. $35.00. 682 Pp.

Abstract

Courses in international or comparative social welfare have many benefits, but require a framework for systematic comparisons between countries. This article presents an institutional political process model for studying social welfare policy comparatively. The principal elements of the model include each country's societal values, government institutions (operationalized as the role of interest groups), policy goals, and system implementation (type of welfare system). The model is demonstrated through a comparison of the dissimilar social welfare systems of Sweden and the U.S.     

Assessing Public Support for State Government Social Welfare Expenditures

Abstract

This study compared two different approaches to assessing the level of public support for social welfare spending at the state government level. The first approach focuses on the degree to which the public supports state government's involvement in public welfare spending. The second approach identifies the importance the public places on social welfare spending when compared to other possible functions of state government. Using Alabama data, the paper examined changes in general and comparative public support for state budget expenditures from 1980 to 2000 in Alabama. In addition, we examined the effectiveness of sociodemographic and attitudinal characteristics of respondents as predictors of both general and comparative support for three social welfare functions of state government. Support for “benefits for poor people” grew both generally and comparatively in the 20-year period; support for programs for older people remained steady; and support for mental health services declined. Sociodemographic predictors of general and comparative sup port were generally consistent with a self-interest model     

Public or Private Management? A Comparative Analysis of Social Policies in Europe

Across the world, political leaders and policy experts frequently use the labels ‘public’ and ‘private’ to organize social policies. A line seemingly separates public from private efforts, with social policies publicly organized in some countries and privately organized in others. According to this perspective, a public social policy is undertaken by government or deals with a public matter. When a social policy is private, non‐public actors and institutions, like employers, undertake it or it deals with a private matter, like body control. This article examines whether public or private approaches to managing social policies are currently emphasized in European countries. I begin by defining social policy and then provide an overview of the public–private dichotomy in managing social policy. I review predominant typological frameworks of public–private organization of social policies and examine three welfare social policies and three social policies dealing with body control by comparing public–private organization of these six policy areas across 21 European countries. I conclude by discussing the limited diversity of public–private organizations of social policies in Europe.     

Intergenerational equity: sup,inf, lim sup,and lim inf

We study the problem of intergenerational equity for utility streams and a countable set of agents. A numerical social welfare function is invariant to ordinal transformation, satisfies a weak monotonicity condition, and an invariance with respect to concatenation of utility streams if and only if it is either the sup, inf, lim sup, or lim inf. I would like to thank Federico Echenique, Marc Fleurbaey, and Toyotaka Sakai for discussions on intergenerational equity. Two anonymous referees and the Associate Editor also provided very useful comments. All errors are my own.     

EMPLOYMENT AND OUTPUT EFFECTS OF GOVERNMENT SPENDING: IS GOVERNMENT SIZE IMPORTANT?

The efects of government spending on employment and output may depend on government size and the persistence of spending. The empirical results suggest that permanent (or persistent) changes in government consumption have a greater impact on output and employment than temporary (or cyclical) changes. This implies a negative wealth effect and reduces the stabilization potency of government spending. The findings also support the hypothesis that the output elasticity of government consumption is positive but declines with increases in government size. Using the estimated equations, I calculate the optimal government size for the representative country as around 20 percent of GDP.     

The possible role of the non-profit sector in Hungary

A common feature of most non-profit theories is their concentration on the service-providing role of non-profit organisations, and the neglect of their redistributional role. At the cost of some simplification, there are two possible public policy responses to social inequalities: (1) the welfare state model with welfare redistribution under government control; and (2) the non-profit-based model — a large network of private organisations heavily supported by the government and complemented by government delivery of services. After 40 years of state socialism, Hungary now faces some important questions. What will be the role of the new voluntary sector? What are the possibilities of following the Western European route — a version of the welfare state model — or the American way — a non-profit-based model bolstered by ‘third-party government’? The present Hungarian situation is ambiguous; we can find arguments for and against both. It is also argued that a mixed solution, some cooperation between the public and private sectors, is needed. The Western European, American and Hungarian experiences indicate that only a strong for-profit sector and a developed, harmonious government/non-profit partnership can ensure healthy social and economic development. The present Hungarian situation is far too complex and difficult to promise a fast and conflict-free establishment of this partnership. But both public institutions and government are acting in a way that may result in the development of a government-supported non-profit sector. There may be an opportunity for developing a ‘Hungarian welfare state model’.