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The Size and Composition of Government Spending in Europe and Its Impact on Well-Being

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  • Hessami, Zohal

Abstract

This paper analyses whether large governments in Europe reflect efficient responses to a changing social and economic environment (‘welfare economic view’) as opposed to wasteful spending (‘public choice view’). To this end, the effect of government size on subjective well-being is estimated in a micro dataset covering twelve EU countries from 1990 to 2000. The estimations provide evidence for (i) an inversely U-shaped relationship between public sector size and well-being. (ii) The effect of government size on well-being depends on levels of corruption and decentralization as well as people’s ideological preferences and their position in the income distribution. Finally, (iii) higher levels of well-being could have been achieved by spending more on education and less on social protection.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 21195.

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Date of creation: 07 Mar 2010
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Handle: RePEc:pra:mprapa:21195

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Keywords: Life satisfaction; well-being; public spending; government size;

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Citations

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Cited by:
  1. Zohal Hessami, 2011. "Globalization's Winners and Losers - Evidence from Life Satisfaction Data, 1975 -2001," Working Paper Series of the Department of Economics, University of Konstanz 2011-12, Department of Economics, University of Konstanz.
  2. Yamamura, Eiji, 2010. "The effects of information asymmetry and government size on happiness: A case study from Japan," MPRA Paper 27182, University Library of Munich, Germany.
  3. Seoyong Kim & Donggeun Kim, 2012. "Does Government Make People Happy?: Exploring New Research Directions for Government’s Roles in Happiness," Journal of Happiness Studies, Springer, vol. 13(5), pages 875-899, October.
  4. Akay, Alpaslan & Bargain, Olivier & Dolls, Mathias & Neumann, Dirk & Peichl, Andreas & Siegloch, Sebastian, 2012. "Happy Taxpayers? Income Taxation and Well-Being," IZA Discussion Papers 6999, Institute for the Study of Labor (IZA).
  5. Bernd Hayo & Florian Neumeier, 2012. "Leaders’ Impact on Public Spending Priorities: The Case of the German Laender," MAGKS Papers on Economics 201209, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  6. Luis Diaz-Serrano & Andrés Rodríguez-Pose, 2012. "Decentralization, Subjective Well-Being And The Perception Of Institutions," ERSA conference papers ersa12p586, European Regional Science Association.
  7. Sequeira, Tiago & Minas, Tiago & Ferreira-Lopes, Alexandra, 2014. "Do Large Governments Decrease Happiness?," MPRA Paper 54418, University Library of Munich, Germany.

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