Public sector efficiency in the design of a euro-area social benefit scheme |
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| Institution: | 1. Department of Economics, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria;2. Department of Economics, University of Lagos, Lagos, Nigeria;1. Department MEMOTEF, Sapienza University of Rome, Italy;2. Department of Economics and Law, Sapienza University of Rome, Italy;3. Council of Experts, Ministry of Economy and Finance, Italy;4. School of European Political Economy, Luiss, Rome, Italy;5. Department of Treasury, Ministry of Economy and Finance, Italy;1. Economics Division, University of Leeds, Leeds, LS2 9JT, UK;2. University of Sannio, Italy;1. Department of Economics and Property, School of Economics and Finance, Curtin University, Bentley, 6102 WA, Australia;2. School of International Relations, Sun Yat-sen University, China;3. Western Australian School of Mines, School of Management, Curtin University, Perth, Australia |
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| Abstract: | This study examines the importance of public sector efficiency in the design of a euro area-wide social benefit scheme. Our results reveal large-scale inefficiencies in the use of funds allocated to the scheme during the great recession and euro area sovereign debt crisis that followed, with member states wasting on average 34.6% of funds allocated to it. We therefore propose that to ensure the smooth functioning of the scheme, the fiscal union will first of all have to strengthen it at the national level by improving efficiency in the use of funds by governments. We show that this can be achieved by providing a framework for the transfer of the “critical success factors” in the policies implemented by the most efficient administrations. Furthermore, we show how public sector efficiency considerations can help ameliorate the problem of moral hazard associated with a centralized insurance scheme. |
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| Keywords: | Fiscal union Public sector efficiency Social benefit scheme Policy transfer European fiscal integration F36 F42 H53 F55 |
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