Does the supply of a welfare state create its own demand? Many economic scholars studying welfare arrangements refer to Say’s law and insinuate a self-destructive welfare state. However, little is known about the empirical validity of these assumptions and hypotheses. We study the dynamic effect of different welfare arrangements on benefit fraud. In particular, we analyze the impact of the welfare state on the respective social norm, i. e. benefit morale. It turns out that a high level of public social expenditures and a high unemployment rate are associated with a small positive (or no) immediate impact on benefit morale, which however is crowded out by adverse medium and long run effects.
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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number
2009-04.
Find related papers by JEL classification: A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology
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