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Sustainable Social Spending

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Author Info
Lindbeck, Assar () (Institute for International Economic Studies, Stockholm University)

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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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Publisher 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
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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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Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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