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Sustainable Social Spending

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  • Lindbeck, Assar

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

Abstract

The paper discusses a number of threats to the financial sustainability of social spending: increased internationalization of national economies, gradually higher relative costs of producing a number of human services, the “graying” of the population, slower productivity growth in the private sector, low employment rates, and various types of disincentive effects related to the welfare state itself, including moral hazard. I argue that threats from gradually rising costs of providing human services and disincentive effects of welfare-state arrangements, in particular moral hazard and benefit dependency, are more difficult to deal with than the other threats. I also discuss the choice between ad hoc policy reforms and automatic adjustment mechanisms, delegated to administrative bodies, for dealing with these threats.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 739.

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Length: 37 pages
Date of creation: 06 Oct 2005
Date of revision:
Handle: RePEc:hhs:iiessp:0739

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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Related research

Keywords: Sustainable fiscal policy; Baumol’s disease; moral hazard; automatic adjustment mechanisms;

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References

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Citations

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Cited by:
  1. Frederick van der Ploeg, 2007. "Sustainable Social Spending and Stagnant Public Services: Baumol's Cost Disease Revisited," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 63(4), pages 519-547, December.
  2. Torben Andersen, 2007. "The Scandinavian Model – Prospects and Challenges," CESifo Working Paper Series 1903, CESifo Group Munich.

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