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The Birth and Growth of the Social Insurance State: Explaining Old Age and Medical Insurance Across Countries

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  • David M. Cutler
  • Richard Johnson

Abstract

We examine the factors leading to creation and growth of national Old-Age Insurance (OAI) and Health Insurance schemes. None of the theories we test fit the data very well. There is weak evidence that the probability of adopting a system declines in a country's wealth and in the ethnic heterogeneity of its population. Catholic countries are more likely to create earnings-related OAI systems. The growth of OAI spending since 1960 has varied considerably across countries, with fast growth in countries emerging from dictatorship and non-English speaking countries. We conclude that social insurance can be politically expedient for many different reasons.

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  • David M. Cutler & Richard Johnson, 2004. "The Birth and Growth of the Social Insurance State: Explaining Old Age and Medical Insurance Across Countries," Public Choice, Springer, vol. 120(1_2), pages 87-121, July.
    • Handle: RePEc:kap:pubcho:v:120:y:2004:i:1_2:p:87-121
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