Expanding the welfare system : a proposal for reform
AbstractThe proposal involves the establishment of ?welfare accounts? for every person in a country. There are to be four accounts: a retirement account (covering pensions), an unemployment account (covering unemployment support), a human capital account (covering education and training), and a health account (covering insurance against sickness and disability). Instead of the current welfare state systems - where welfare services are financed predominantly out of general taxes - people would make ongoing, mandatory contributions to each of these welfare accounts. The balances in these accounts would cover people?s major welfare needs. The government is to set mandatory minimum contribution rates and maximum withdrawal rates from the accounts. The government is to have two budgetary systems: one in which non-welfare expenditures are financed through the existing array of taxes, and another system in which the public-sector expenditures on welfare services are financed through payments from people?s welfare accounts. The government would be able to redistribute income across people?s welfare accounts, but these redistributions would be constrained to be of the balanced-budget variety: total (economy-wide) taxes on each of the welfare accounts would be equal to total transfers into each of accounts. The public and private sectors would provide welfare services on an equal footing, setting prices for these services and competing with one another for the custom of the welfare account holders. We argue that moving from the current welfare state systems to a welfare account system may be expected to play a substantial role in reducing unemployment, encouraging labour force participation, promoting skills, reducing governments? budgetary pressures, cushioning people against economic risks, ensuring efficient provision of health and education services, providing social safety nets and redistributing incomes more efficiently. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Kiel Institute for the World Economy (IfW) in its series Open Access Publications from Kiel Institute for the World Economy with number 2093.
Date of creation: 1998
Date of revision:
Welfare state ; redistribution ; social insurance ; unemployment ; health ; education and training ; pensions ; sickness and disability ;
Find related papers by JEL classification:
- E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fölster, Stefan, 1996. "Social Insurance Based on Personal Savings Accounts: A possible reform strategy for overburdened welfare states?," Working Paper Series 454, Research Institute of Industrial Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.