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Does government spending crowd out voluntary labor and donations?

Author

Listed:
  • Julia Bredtmann

    (RWI, and IZA, Germany)

  • Fernanda Martinez Flores

    (RWI, and IZA, Germany)

Abstract

Private charitable contributions play an essential role in most economies. From a policy perspective, there is concern that comprehensive government spending might crowd out private charitable donations. If perfect crowding out occurs, then every dollar spent by the government will lead to a one-for-one decrease in private spending, leaving the total level of welfare unaltered. Understanding the magnitude and the causes of crowding out is crucial from a policy perspective, as crowding out represents a hidden cost to public spending and can thus have significant consequences for government policies toward public welfare provision.

Suggested Citation

  • Julia Bredtmann & Fernanda Martinez Flores, 2023. "Does government spending crowd out voluntary labor and donations?," IZA World of Labor, Institute of Labor Economics (IZA), pages 299-299, January.
    • Handle: RePEc:iza:izawol:journl:2023:n:299
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    References listed on IDEAS

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    Cited by:

    1. Andrea Vega-Tinoco & Ana Isabel Gil-Lacruz & Marta Gil-Lacruz, 2022. "Civic Participation as a Promoter of Well-Being: Comparative Analysis among European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(1), pages 217-237, November.

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    More about this item

    Keywords

    private philanthropy; time and money donations; government spending; crowding out;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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