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An Empirical Analysis of the Dynamics of the Welfare State: the Case of Benefit Morale

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  • Martin Halla
  • Mario Lackner
  • Friedrich Schneider

Abstract

Does the supply of a welfare state create its own demand? Many economic scholars studying welfare arrangements refer to Say’s law and insinuate a self-destructive welfare state. However, little is known about the empirical validity of these assumptions and hypotheses. We study the dynamic effect of different welfare arrangements on benefit fraud. In particular, we analyze the impact of the welfare state on the respective social norm, i. e. benefit morale. It turns out that a high level of public social expenditures and a high unemployment rate are associated with a small positive (or no) immediate impact on benefit morale, which however is crowded out by adverse medium and long run effects.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2641.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2641

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Keywords: welfare state; social norms; benefit fraud; benefit morale;

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References

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  1. Lindbeck, Assar, 2003. "An Essay on Welfare State Dynamics," Working Paper Series 595, Research Institute of Industrial Economics.
  2. Henrekson, Magnus & Persson, Mats, 2001. "The Effects on Sick Leave of Changes in the Sickness Insurance System," Working Paper Series in Economics and Finance 0444, Stockholm School of Economics, revised 08 Aug 2001.
  3. Lindbeck, Assar, 1995. "Hazardous Welfare-State Dynamics," Working Paper Series 428, Research Institute of Industrial Economics.
  4. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
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  7. Heinemann, Friedrich, 2007. "Is the Welfare State Self-destructive? A Study of Government Benefit Morale," ZEW Discussion Papers 07-029, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Assar Lindbeck & Sten Nyberg & Jörg Weibull, 2003. "Social Norms and Welfare State Dynamics," CESifo Working Paper Series 931, CESifo Group Munich.
  9. Halla, Martin & Schneider, Friedrich, 2008. "Taxes and Benefits: Two Distinct Options to Cheat on the State?," IZA Discussion Papers 3536, Institute for the Study of Labor (IZA).
  10. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
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  24. Greenberg, David & Moffitt, Robert & Friedmann, John, 1981. "Underreporting and Experimental Effects on Work Effort: Evidence from the Gary Income Maintenance Experiment," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 581-89, November.
  25. Lindbeck, Assar, 1995. "Welfare State Disincentives with Endogenous Habits and Norms," Working Paper Series 441, Research Institute of Industrial Economics.
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Citations

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Cited by:
  1. Chadi, Adrian, 2011. "Employed but still unhappy? On the relevance of the social work norm," CAWM Discussion Papers 42, Center of Applied Economic Research Münster (CAWM), University of Münster.
  2. Michael Funke & Marc Gronwald, 2009. "A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth," CESifo Working Paper Series 2692, CESifo Group Munich.
  3. Corneo, Giacomo & Neher, Frank, 2012. "Income Inequality and Self-Reported Values," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 382, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Friedrich Heinemann, 2011. "Economic crisis and morale," European Journal of Law and Economics, Springer, vol. 32(1), pages 35-49, August.
  5. Schnellenbach, Jan & Schubert, Christian, 2014. "Behavioral public choice: A survey," Freiburg Discussion Papers on Constitutional Economics 14/03, Walter Eucken Institut e.V..
  6. Martin Halla, 2010. "The Link between the Intrinsic Motivation to Comply and Compliance Behavior – A Critical Appraisal of Existing Evidence," Economics working papers 2010-03, Department of Economics, Johannes Kepler University Linz, Austria.
  7. Giacomo Corneo, 2011. "GINI DP 17: Income Inequality, Value Systems and Macroeconomic Performance," GINI Discussion Papers 17, AIAS, Amsterdam Institute for Advanced Labour Studies.
  8. repec:aia:ginidp:dp17 is not listed on IDEAS
  9. Daniel Arnold, 2012. "Benefit Morale and Cross-Country Diversity in Sick Pay Entitlements," IAAEU Discussion Papers 201211, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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