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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 seek to explain why countries have adopted national Old-Age Insurance and Health Insurance programs. Theoretical work has posited several factors that could lead to this adoption: the strain from expanding capitalism; the need for political legitimacy; the desire to transfer to similar people; increased wealth; and the outcome of leviathan government. We relate the probability of a country’s creating social insurance to proxies for each of these theories. We find weak evidence that the probability of adopting a system declines with increases in wealth and with greater ethnic heterogeneity. Still, none of the theories is very strongly related to system adoption. We conclude that social insurance can be politically expedient for many different reasons.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number RWP 01-13.

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Date of creation: 2001
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Handle: RePEc:fip:fedkrw:rwp01-13

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Keywords: Economic history ; Insurance ; Insurance; Health ; Old age;

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References

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  1. Cukierman, A. & Tommasi, M., 1997. "When Does It Take a Nixon to Go to China," Papers 30-97, Tel Aviv.
  2. Naohiro Yashiro & Takashi Oshio, 1999. "Social Security and Retirement in Japan," NBER Chapters, in: Social Security and Retirement around the World, pages 239-267 National Bureau of Economic Research, Inc.
  3. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
  4. Jeffrey A. Miron & David N. Weil, 1998. "The Genesis and Evolution of Social Security," NBER Chapters, in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 297-322 National Bureau of Economic Research, Inc.
  5. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank.
  6. Sam Peltzman, 1980. "The Growth of Government," University of Chicago - George G. Stigler Center for Study of Economy and State 1, Chicago - Center for Study of Economy and State.
  7. Willem Adema & Marcel Einerhand & Bengt Eklind & Jorgen Lotz & Mark Pearson, 1996. "Net Public Social Expenditure," OECD Labour Market and Social Policy Occasional Papers 19, OECD Publishing.
  8. Browning, Edgar K, 1975. "Why the Social Insurance Budget Is Too Large in a Democracy," Economic Inquiry, Western Economic Association International, vol. 13(3), pages 373-88, September.
  9. Alesina, Alberto & Tabellini, Guido, 1990. "A Positive Theory of Fiscal Deficits and Government Debt," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 403-14, July.
  10. Nouriel Roubini & Jeffrey Sachs, 1988. "Political and Economic Determinants of Budget Deficits in the IndustrialDemocracies," NBER Working Papers 2682, National Bureau of Economic Research, Inc.
  11. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
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Citations

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Cited by:
  1. Rizzo, Giuseppe, 2009. "Fertility and pension systems," MPRA Paper 12998, University Library of Munich, Germany.
  2. Vincenzo Galasso & Paola Profeta, 2011. "When the State Mirrors the Family: The Design of Pension Systems," Working Papers 392, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  3. Aggarwal, Raj & Goodell, John W., 2013. "Political-economy of pension plans: Impact of institutions, gender, and culture," Journal of Banking & Finance, Elsevier, vol. 37(6), pages 1860-1879.
  4. Enrico Perotti & Armin Schwienbacher, 2007. "The Political Origin of Pension Funding," Tinbergen Institute Discussion Papers 07-004/2, Tinbergen Institute, revised 30 Oct 2008.
  5. Enrico Perotti & Armin Schwienbacher, 2007. "The Political Origin of Pension Funding," Tinbergen Institute Discussion Papers 07-004/2, Tinbergen Institute, revised 30 Oct 2008.
  6. Sergio Espuelas-Barroso, 2010. "The determinants of social spending in Spain, 1950-1980, Are dictatorships less redistributive?," Working Papers in Economics 240, Universitat de Barcelona. Espai de Recerca en Economia.
  7. Casey B. Mulligan & Ricard Gil & Xavier Sala-i-Martin, 2002. "Social Security and Democracy," NBER Working Papers 8958, National Bureau of Economic Research, Inc.
  8. Niklas Potrafke, 2012. "Is German domestic social policy politically controversial?," Public Choice, Springer, vol. 153(3), pages 393-418, December.
  9. J. Ignacio Conde-Ruiz & Paola Profeta, 2007. "The Redistributive Design of Social Security Systems," Economic Journal, Royal Economic Society, vol. 117(520), pages 686-712, 04.
  10. Goulão, Catarina, 2014. "Voluntary Public Health Insurance," TSE Working Papers 14-488, Toulouse School of Economics (TSE).
  11. VANNESTE, Jacques & ZHANG, Ying, 2012. "The impact of government expenditure on prepayment for health services: Evidence from cointegration analysis in heterogeneous panel data," Working Papers 2012029, University of Antwerp, Faculty of Applied Economics.
  12. Feigl, Andrea B. & Ding, Eric L., 2013. "Evidenced Formal Coverage Index and universal healthcare enactment: A prospective longitudinal study of economic, social, and political predictors of 194 countries," Health Policy, Elsevier, vol. 113(1), pages 50-60.
  13. Vincenzo Galasso & Paola Profeta, 2013. "From Family Culture to Welfare State Design," CHILD Working Papers Series 14, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.

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