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Sustainable Social Spending

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  • Lindbeck, Assar

    ()
    (The Research Institute of Industrial Economics)

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 Research Institute of Industrial Economics in its series Working Paper Series with number 646.

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Length: 37 pages
Date of creation: 24 Oct 2005
Date of revision:
Handle: RePEc:hhs:iuiwop:0646

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.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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  2. Hans-Werner Sinn, 1999. "Pension Reform and Demographic Crisis: Why a Funded System is Needed and why it is not Needed," CESifo Working Paper Series 195, CESifo Group Munich.
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  4. Alessandra Casella, 1999. "Tradable deficit permits:efficient implementation of the Stability Pact in the European Monetary Union," Economic Policy, CEPR & CES & MSH, vol. 14(29), pages 321-362, October.
  5. Lindbeck, Assar & Niepelt, Dirk, 2004. "Improving the SGP: Taxes and Delegation rather than Fines," Working Paper Series 633, Research Institute of Industrial Economics.
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  23. Hesselius, Patrik & Johansson, Per & Larsson, Laura, 2005. "Monitoring sickness insurance claimants: evidence from a social experiment," Working Paper Series 2005:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  24. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-17, September.
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Citations

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Cited by:
  1. Torben Andersen, 2007. "The Scandinavian Model – Prospects and Challenges," CESifo Working Paper Series 1903, CESifo Group Munich.
  2. Frederick van der Ploeg, 2007. "Sustainable Social Spending and Stagnant Public Services: Baumol's Cost Disease Revisited," Economics Working Papers ECO2007/34, European University Institute.

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