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Convergence in social protection across EU countries, 1970-1999

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  • Simón Sosvilla-Rivero
  • José A. Herce
  • Juan-José. de Lucio

Abstract

This paper has examined the degree of convergence in social protection registered in the European Union (EU) during the 1970-1999 period. To that end, we study the long-run properties of time series of social protection benefits, applying unit root tests that allow for endogenously determined changes in the deterministic trends to data from Eurostat for the 12 member countries that formed the EU before the enlargement to Austria, Finland and Sweden. Our results suggest that there is no evidence of long-run or strong convergence (neither with respect to Germany nor with respect to the EU12 average) in Social Protection expenditure to GDP ratios, that would imply equalisation of the latter. However we do find evidence of catching-up or weak convergence with respect to both Germany (as a bench-mark) and the EU12 average for all countries, except Greece. These results, in turn, suggest that some countries have been carrying out a stronger effort, as far as social protection is concerned, what has resulted in their situation converging with that of other countries where social protection expenditure has been much more significant all through the period. This effort can contribute to facilitate factor mobility within Europe and, as we have argued somewhere else, may have implications for the speed of growth in member states and the EU at large.

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Paper provided by FEDEA in its series Working Papers with number 2003-01.

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Handle: RePEc:fda:fdaddt:2003-01

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  1. Andrew B. Bernard & Steven N. Durlauf, 1994. "Interpreting Tests of the Convergence Hypothesis," NBER Technical Working Papers 0159, National Bureau of Economic Research, Inc.
  2. Bernard, Andrew B & Durlauf, Steven N, 1995. "Convergence in International Output," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 97-108, April-Jun.
  3. José A. Herce & Simón Sosvilla-Rivero & Juan J. De Lucio, . "Growth and the Welfare State in the EU: A causality analysis," Working Papers 98-12, FEDEA.
  4. Oscar Bajo-Rubio & Simón Sosvilla-Rivero & Fernado Fernández-Rodríguez, . "Asymmetry in the EMS: New evidence based on non-linear forecasts," Working Papers 97-24, FEDEA.
  5. Jose Herce & Simon Sosvilla-Rivero & Juan Jose De Lucio, 2000. "Social protection benefits and growth: evidence from the European Union," Applied Economics Letters, Taylor & Francis Journals, vol. 7(6), pages 397-400.
  6. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
  7. Javier Alonso & Miguel-Angel Galindo & Simon Sosvilla-Rivero, 1998. "Convergence in social protection benefits across EU countries," Applied Economics Letters, Taylor & Francis Journals, vol. 5(3), pages 153-155.
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