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Incentives in the Welfare State

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  • Lindbeck, Assar

    ()
    (Institute for International Economic Studies, Stockholm University)

Abstract

This paper deals with economic incentives and welfare-state arrangements in OECD countries; it also offers some lessons for would-be welfare states. These arrangements differ, of course, among OECD countries. In particular, there is wide variation in the extent to which countries rely on four basic institutions - the state, the firm, the family and the market. Countries also differ in their reliance on (i) a common safety net, often in the form of flat-rate benefits tied to specific contingencies; (ii) means-tested benefits for low-income groups; and (iii) income protection, i.e., benefits that are tied to previous income. Another distinction is between corporatist welfare states, where benefits are tied to labor contracts, and universal welfare states in which benefits are conditional on residence or citizenship. This distinction is blurred, however, by recent tendencies in corporatist welfare states to extend coverage to individuals who have very weak attachment to the labor market, and in universal welfare states to tie benefits to previous or contemporary work under the slogan “workfare” rather than “welfare”.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 604.

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Length: 33 pages
Date of creation: 31 Oct 1997
Date of revision:
Handle: RePEc:hhs:iiessp:0604

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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
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Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Keywords: economic incentives; welfare-state arrangements;

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  1. Bjorklund, A. & Palme, M. & Svensson, I., 1995. "Assessing the Effects of Swedish Tax and Benefit Reforms on Income Distribution Using Different Income Concepts," Papers 13, Uppsala - Working Paper Series.
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  3. Ljungqvist, Lars & Sargent, Thomas J, 1995. "Welfare States and Unemployment," Economic Theory, Springer, vol. 6(1), pages 143-60, June.
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  5. Lindbeck, Assar, 1995. "Welfare State Disincentives with Endogenous Habits and Norms," Working Paper Series 441, Research Institute of Industrial Economics.
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  14. Paul Cashin, 1995. "Government Spending, Taxes, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 237-269, June.
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  16. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
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  18. Lindbeck, A., 1994. "Uncertainty under the Welfare State - Policy Induced Risk -," Papers 576, Stockholm - International Economic Studies.
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