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Is the Welfare State in Trouble?

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  • Assar Lindbeck

Abstract

The social benefits and the counteracting costs of the modern welfare state are examined. A modern welfare state has made significant contributions to total welfare by mitigating poverty, providing greater equality of wealth, increasing the supply of human capital and reducing uncertainty. These programs can be pushed beyond the point of net social benefit when the tax burden is so heavy (at the margin) that it results in a reduction of total output. Evidence is adduced to suggest that the "transfer states" of countries in northwest Europe have negative marginal benefits.

Suggested Citation

  • Assar Lindbeck, 1987. "Is the Welfare State in Trouble?," Eastern Economic Journal, Eastern Economic Association, vol. 13(4), pages 345-351, Oct-Dec.
    • Handle: RePEc:eej:eeconj:v:13:y:1987:i:4:p:345-351
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume13/V13N4P345_351.pdf
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    References listed on IDEAS

    as
    1. Browning, Edgar K, 1976. "The Marginal Cost of Public Funds," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 283-298, April.
    2. Hansson, Ingemar, 1984. " Marginal Cost of Public Funds for Different Tax Instruments and Government Expenditures," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(2), pages 115-130.
    3. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
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