Revisiting the effectiveness of the employment‐oriented welfare state: Considering the quality of employment achievement

The purpose of this study was to examine the effectiveness of an employment‐oriented welfare state. While previous studies have focused on employment growth, this study considers the quality of employment, especially its mediating impact between public social expenditure and fiscal soundness. Three‐step mediated regression analysis was conducted on a data sample from 19 developed countries from 1991 to 2013. The results show that while public social expenditure negatively affects fiscal soundness, if it promotes total and part‐time employment, it can positively affect fiscal soundness. However, when the incidence of involuntary part‐time employment is high, public social expenditure and its impact on employment performance no longer guarantee fiscal soundness. This study addresses the importance of promoting not only employment growth but also employment quality to secure fiscal soundness.     

Welfare Rigidity,the Composition of Public Expenditure and the Welfare Trap

Welfare expenditure is characterized by rigidity, i.e., it goes up easily but is very hard to get down. We introduced welfare rigidity into an endogenous growth model that includes government expenditure to analyze the impact of welfare rigidity and the composition of public expenditure on economic growth and family utility. Our findings show that welfare spending and economic growth have a non-monotonic relationship that is negative or inverted U-shaped depending on cross-country differences. Higher welfare rigidity reduces long-term economic growth and household utility. According to the estimated optimal size of welfare expenditure, China, as a developing country with a large population, has to do all it can to improve people’s livelihood but must at the same time weigh its limited resources so that its welfare expenditure does not fall into a “welfare trap.”     

Overcoming City Limits: Vertical and Horizontal Models of Local Redistributive Policy Making*

Objectives. Contrary to conventional wisdom, Census data show a substantial local role in providing health, housing, and public welfare services. I evaluate two models to explain local social welfare: an intergovernmental model, based on federal and state funds, and an interjurisdictional model, based on measures of local monopoly power. Methods. I estimate a panel data model of local redistributive expenditures from 1992–2002 to test between these alternative explanations for local redistribution. Results. I find that vertical arrangements tend to drive local redistributive spending. Conclusions. Intergovernmental factors drive local social welfare policy and suppress the local welfare race to the bottom.     

An Agenda for Social Security in the Years Ahead

This paper focuses on recent debates on social welfare spending in Australia, and on social security in particular. Its starting point is the current economic climate and the perceived imperative for continued fiscal restraint. Its central argument is that the welfare debate must be placed firmly in the context of the role of the public sector as a whole. In the social welfare context, government interventions through direct expenditures and tax expenditures must be assessed together, along with the impact of the tax structure on revenue raising potential. The paper questions the virtue of increased reliance on selectivity and presents the case for a more universalist approach.     

Public Opinion against Markets? Attitudes towards Market Distribution of Social Services – A Comparison of 17 Countries

This article studies how citizens view the appropriateness of market criteria for allocating services commonly associated with social citizenship rights and welfare state responsibility. The article focuses specifically on a potential role for the market in the provision of social services. The relationship between welfare policy institutions, socio‐economic class and attitudes is explored by comparing attitudes across 17 countries of the Organisation for Economic Co‐operation and Development, using multilevel modelling and data from the 2009 International Social Survey Programme. Results show that public support for market distribution of services is relatively weak in most countries, a result suggesting that public opinion is unlikely to pose a driving force within ongoing processes of welfare marketization. Still, attitudes are found to vary a lot across countries in tandem with between‐country variation in welfare policy design. First, aggregate public support for market distribution of services is stronger in countries with more private spending on services. Second, class differences in attitudes are larger in countries with more extensive state‐led delivery of services. Together, these results point to the operation of normative feedback‐effects flowing from existing welfare policy arrangements. The theoretical arguments and the empirical results presented in this article suggest that future research exploring the relationship between welfare policy and public opinion from a country‐comparative perspective is well advised to place greater focus on the market institutions that, to varying extents in different countries, act as complements to the state in the administration of social welfare.     

Crowding Out or Welfare Promotion? How Foreign Aid Affects Social Expenditures in Latin American Welfare Systems

Foreign assistance constitutes a significant share of government revenue in many low‐ and middle‐income economies and is targeted at poverty reduction and the promotion of social and economic well‐being. This study therefore examines fiscal responses by Latin American welfare states to the inflow of such aid. As a form of external non‐tax revenue, aid can function as a substitution for public welfare expenditure, with a crowding out effect being the likely outcome. This article investigates whether overall aid and aid that is particularly targeted at the social sector substitutes public welfare provision and, if so, whether it also substitutes its function. A time‐series cross‐section analysis of 19 Latin American countries for the period 1980–2008 provides limited support for the assumption that foreign aid payments influence the welfare budget. It is only the health care sector in middle‐income countries which experiences a small decrease in expenditures. Social security and education expenditures are not affected.     

“Crowding in” or “crowding out”? An examination of the impact of the welfare state on generalized social trust

Generalized social trust is correlated with increased levels of civic engagement, lower crime rates, and greater economic growth. Many scholars believe that equality provides the conditions in which social trust can flourish. Thus, welfare programs might be one way to generate social trust. However, the relationship between social spending and trust is contested: Some argue it is negative, while others argue it is positive. This study examined the effects of total social welfare expenditures on social trust in 18 OECD countries, holding constant individual characteristics, country characteristics, and country and year effects. Fixed effects analyses indicate that every additional percent of gross domestic product spent on social expenditures 5 years prior is associated with a 4.7 percent increased likelihood that respondents of that country will endorse trusting other people. Further testing for reverse causality found no significant association between trust and later social expenditures, supporting the claim that expenditures drive trust instead of the reverse.     

Public investment in care services in Turkey: Promoting employment & gender inclusive growth

Recent policy debates on macroeconomic tools to counteract the prolonged global economic recession point to the potential of fiscal policies with appropriate sectoral targets for simultaneously boosting effective demand while alleviating inequalities through employment generation. This paper contributes to the debate by pointing to the social care services sector –in particular early childhood education and care (ECEC) — as an effective target of fiscal spending for robust employment generation and gender inclusive growth. We use a macro-micro simulation model to examine the aggregate and gender employment impact of increasing public expenditures on ECEC services, an underdeveloped sector in Turkey versus physical infrastructure and construction, a common target of stimulatory spending. Our methodological approach combines input-output analysis on aggregate employment effects with a statistical microsimulation approach to assess distributional outcomes. We find that an expansion of ECEC services creates not only significantly more jobs but also does so in a more gender-equitable and fiscally sustainable way than the a construction boom.     

Determinants of Social Expenditure in Sri Lanka

The study examines the determinants of social expenditure in Sri Lanka for the period 1970–2010. The data are from a new data set assembled by the authors. The social spending data are collected from the Central Bank of Sri Lanka on education, health, and also on welfare spending. The study explains the determinants of social spending considering the demand‐side and the supply‐side driving forces and finds that inequality issues have been a major concern of social policy in Sri Lanka. Similarly, this study implies the influence of political behavior to satisfy voters as explained by the fiscal illusion theory. The globalization is not significant for social expenditure as commonly assumed in developed countries. Even the consequences of the self‐interested behavior of bureaucrats are not evident in the Sri Lankan welfare sector.     

Social income transfers and poverty: A cross‐country analysis for OECD countries

Caminada K, Goudswaard K, Koster F. Social income transfers and poverty: a cross‐country analysis for OECD countries Poverty alleviation is an important policy objective in developed welfare states. This article reports on a study of the association between social transfer policies and poverty. It has been claimed in several studies that based on a simple bivariate approach, high social effort goes along with low poverty levels. Empirical studies have also found that factors such as demographic and economic conditions may also have an influence on poverty, affecting the relationship between social spending and poverty. In the present study, we empirically analysed the impact of social expenditure on poverty for the period 1985–2005, and in contrast to previous research, demographic and macroeconomic differences across countries were controlled for. Quite a strong negative relationship was still found between the level of social expenditure and poverty. Ageing and unemployment rates were found to have some explanatory power but without affecting the association between social transfers and poverty. Thus, the multivariate approach chosen in this study confirms the results of earlier research.     

Social Welfare Reform Since the 1997 Economic Crisis in Korea: Achievement, Limits, and Future Prospects

Social welfare reform has been implemented in Korea since the 1997 financial crisis. A dominant concern of the reform was on equality and social solidarity. A major means to this end was establishing universalistic social insurance programs like those in developed welfare states. The reform efforts produced some positive results but were not greatly successful. Income polarization and the deteriorating economic status of low-income families have become big social issues. Many low-income families have not gained many benefits from the reformed social security system. The rapid aging of the population is creating an exploding demand for social spending, risking the fiscal sustainability of major social insurance programs. The reform experience suggests that a social welfare system based on western-style universal social insurance may be too expensive to sustain and not very effective in protecting disadvantaged families in Korea. More attention is being paid to expenditure control and efficiency. Social insurance programs may need to be leaner than those in traditional welfare states. Targeted programs, such as the "making work pay" policy, are likely to be expanded more broadly to low-income families. The future of the Korean welfare state may hinge on successful employment support for working families and extensive investment in their human capital.     

The redistributive effect of public and private social programmes: A cross‐country empirical analysis

A function of many national social protection systems is to substantially redistribute income. However, the size and nature of social protection programmes are changing. In a number of countries there has been a shift from public towards private social protection arrangements, with the latter substituting for, or complementing, public programmes. Developing earlier work, this present article analyses the redistributive impact on income of public versus private social protection programmes. Using recent data from the Organisation for Economic Co‐operation and Development, we find a strong positive relationship between public social expenditures and income redistribution across countries. For private social expenditures, we find a weak, but statistically significant, negative relationship with the level of redistribution. In countries where a larger share of total social expenditure is accorded to private arrangements there is less income redistribution. We conclude that the choice between the relative weight of public and private provision of social protection affects the redistributive impact of the welfare state.     

Social investment effects of public education,health care,and welfare service expenditures on economic growth

The purpose of this study is to theoretically and empirically examine whether public spending in education, health care, and welfare service operates as a fruitful investment in welfare states, which has been implied in the literature of social investment arguments. Based on comprehensive review of existing literature, this study suggested a tripartite mechanism of social investment effect of such spending, that is “enhancement of human capital,” “support for labor force participation,” and “job creation.” To find the empirical evidence, a pooled time‐series cross‐section analysis was conducted with the data of 15 advanced welfare states from 1980 to 2015 using estimation technique of fixed‐effect model. The results confirmed that public spending in education, health care, and welfare service had a positive medium‐term as well as long‐term effect on economic performance, while cash‐type welfare spending had an obscure or no visible effect on economy. Government consumption that is a proxy and control variable of size of the welfare state showed a positive effect on real GDP in the medium term but a negative effect in the long run. In conclusion, this study suggests that reinforcing social services should be recognized and dealt with as essence of social investment strategy.     

Distribution of social service expenditures: a study

Because this country is providing more social service through public programs, it is important that professionals as well as policymakers understand how the billions of dollars devoted to these services are being spent. This study investigated patterns of distribution of social service expenditures and found a trend toward equalization of expenditures among the states.     

Crime,correction, education and welfare in the U.S. – What role does the government play?

As federal, state and local governments continue to allocate a significant share of their resources to law enforcement and correctional spending, concerns have risen that spending in education and welfare is declining. With fiscal pressure in the United States mounting, it is important to determine the effectiveness of public spending in deterring crime. This paper compares the effectiveness of the impact of government spending on welfare and education with that of law enforcement and correction on crime. Using panel data from 50 U.S. states over a time period of 1994–2014, results of linear regression with panel corrected standard errors as well as GMM estimation reveals that public welfare and education spending can potentially lower violent and property crime rates but law enforcement spending can only deter property crime. However, correctional spending can exacerbate both types of crimes. There is little to no evidence of the presence of crowding out of one category of spending by another. This results in the policy implication that more resources be allocated towards welfare and education programs.     

Social investment,social service and the economic performance of welfare states

This article begins with an examination of the role of social services as the key instrument of social investment strategy, presenting an empirical analysis of its impact on economic performance. A pooled time series, cross‐section analysis was conducted with the data of 15 welfare states from 1990 to 2007 under the ‘social investment hypothesis’ that more social service orientedness brings about a greater positive effect on the economy. The results show that a larger share of social service spending in the total social expenditure – more social service orientedness – contributes to economic growth and labour market performance, whereas a larger aggregate size of the welfare state may have a negative effect on employment. In conclusion, this study suggests that the relatively ambiguous welfare strategy of social investment could be clarified as a ‘transition from income security to livelihood security’ in which emphasis is placed on social service. Key Practitioner Message: ● This study suggests that the key instrument of social investment strategy is social service; ● The results show that more social service orientedness contributes to economic growth and labour market performance.     

The Retrenchment of the Welfare State in Latin America: The Case of Argentina

According to the conventional approving account of the transformations which have been taking place in public policy and in markets in Latin America, Argentina constitutes one of the most successful examples of wide-ranging and rapid change. Certainly the experience of Argentina offers an excellent case-study of what in the literature is termed " the retrenchment of the welfare states"; that is those institutional transformations associated with the "neoconservative revolutions" of recent years. In this paper I analyse the characteristics of Argentinian welfare state retrenchment, distinguishing between two fields of analysis: (1) "systemic retrenchment" which is linked to changes in the "referential environment" of social policy institutions, especially changes in the economic, fiscal, labour market and politico-institutional contexts: (2) "programmatic retrenchment" which refers to changes in the institutional ordering of specific social policies. Finally I draw conclusions in respect of the strategies adopted for the retrenchment of the welfare state in Argentina and discuss probable prospects for the future.     

Reducing Inequality in Childcare Service Use across European Countries: What (if any) Is the role of Social Spending?

Childcare services are increasingly put forward as one of the most important policy levers to combat poverty and inequality. However, higher income families use childcare services to a much larger extent than lower income families. Almost all European countries increased expenditures on childcare over the past years, but has an ever‐increasing public spending on childcare provision led to more equality in its use? In this article, the relationship between spending and childcare use as well as between spending and inequality in childcare use over the period 2006–12 is empirically analyzed using a random effects model drawing on country‐level panel data (n = 156), derived from the EU‐SILC and OECD SOCX databases. Since governments can spend money in different ways, it is discussed whether a public or a market‐based strategy to subsidize childcare provision is related to more equality. The results suggest that more spending leads to higher levels of childcare use, but not directly to lower levels of inequality. For achieving equity in childcare use, government investment should lead to an expansion of childcare places across the income distribution. The findings allow the formulation of new hypotheses regarding the role of the private market in childcare services provision.     

Public Opinion On Taxes And Government Spending

This article analyses egalitarian attitudes as well as opinions concerning taxation and government spending. Australians would prefer to have their taxes reduced than to increase government spending on social services, if faced with such an alternative. Typical welfare programs have a low priority, but the public would like to see increased spending on education and science, health services, roads improvements, military defence, and fighting against drug addiction. An individual's opinions about government spending are influenced by his or her socio-economic characteristics, with unemployed people and urban dwellers being more supportive of government spending on social programs.     

Low Public Expenditures on Social Welfare: Do East Asian Countries have a Secret?

This paper explores the sources of low public expenditures on social welfare in Japan, Korea, Taiwan, Hong Kong and Singapore. Six factors are analysed based on aggregate data: the public/private mix of welfare programmes, the age structure, the maturity of old-age pension schemes, the population coverage of social security, the relative generosity of social security and the role of enterprises and families as alternative providers of welfare. The evidence allows putting some conventional statements about the virtues of East Asian welfare states into questions. Public expenditures on welfare are bound to rise a lot in Japan, Korea and Taiwan, while the level of protection in Hong Kong and Singapore is well below the standards of Western countries.