The paper examines the possible effects of introducing a large-scale welfare reform in Sweden, namely, the introduction of comprehensive welfare accounts. Under this policy, individuals make mandatory contributions to accounts, which they can top up with voluntary contributions. In return, individuals’ welfare benefits are paid from their accounts. The paper uses a large panel of individual income data to examine how the adoption of universal welfare accounts may affect economic activity. We find that this policy could be designed so as to reduce social insurance expenditure considerably, improve the incentives to work and save, all with relatively small redistributive impact.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
3479.
Find related papers by JEL classification: H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
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