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Sustainable social spending

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  • Assar Lindbeck

Abstract

The paper discusses a number of threats to the financial sustainability of social spending: increased internationalization of national economies, gradually higher relative costs of producing a number of human services, the “graying” of the population, slower productivity growth in the private sector, low employment rates, and various types of disincentive effects related to the welfare state itself, including moral hazard. I argue that threats from gradually rising costs of providing human services and disincentive effects of welfare-state arrangements, in particular moral hazard and benefit dependency, are more difficult to deal with than the other threats. I also discuss the choice between ad hoc policy reforms and automatic adjustment mechanisms, delegated to administrative bodies, for dealing with these threats. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • Assar Lindbeck, 2006. "Sustainable social spending," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(4), pages 303-324, August.
    • Handle: RePEc:kap:itaxpf:v:13:y:2006:i:4:p:303-324
    DOI: 10.1007/s10797-006-9175-5
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    Cited by:

    1. Bergh, Andreas, 2016. "The Future of Welfare Services: How Worried Should We Be about Wagner, Baumol and Ageing?," Working Paper Series 1109, Research Institute of Industrial Economics.
    2. Gerdie Everaert & Freddy Heylen & Ruben Schoonackers, 2015. "Fiscal policy and TFP in the OECD: measuring direct and indirect effects," Empirical Economics, Springer, vol. 49(2), pages 605-640, September.
    3. Erling Holmøy & Kyrre Stensnes, 2008. "Will the Norwegian pension reform reach its goals? An integrated micro-macro assessment," Discussion Papers 557, Statistics Norway, Research Department.
    4. Frederick Van der Ploeg, 2006. "Sustainable Social Spending in a Greying Economy with Stagnant Public Services: Baumol’s Cost Disease Revisited," CESifo Working Paper Series 1822, CESifo.
    5. Patricia KAPLANOVA, 2016. "Public Goods as Factors of a Local Economic Development in Slovakia," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2016(26), pages 6-24, June.
    6. Torben M. Andersen & Claus T. Kreiner, 2017. "Baumol's Cost Disease and the Sustainability of the Welfare State," Economica, London School of Economics and Political Science, vol. 84(335), pages 417-429, July.
    7. Torben Andersen, 2007. "The Scandinavian Model – Prospects and Challenges," CESifo Working Paper Series 1903, CESifo.
    8. Frederick van der Ploeg, 2007. "Sustainable Social Spending and Stagnant Public Services: Baumol's Cost Disease Revisited," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(4), pages 519-547, December.
    9. Tausch, Arno, 2008. "The Efficiency of Social Expenditures in the Fight Against Extreme Poverty in Europe [Die Effizienz Der Sozialausgaben Im Kampf Gegen Extreme Armut in Europa]," MPRA Paper 10612, University Library of Munich, Germany.
    10. Torben M. Andersen, 2015. "The Nordic welfare model and welfare services - Can we maintain acceptable standards?," Economics Working Papers 2015-02, Department of Economics and Business Economics, Aarhus University.
    11. Kyrre Stensnes & Nils Martin Stølen, 2007. "Pension Reform in Norway. Microsimulating effects on government expenditures, labour supply incentives and benefit distribution," Discussion Papers 524, Statistics Norway, Research Department.
    12. Tausch, Arno, 2008. "On the world market trajectory of 21 major book publishing companies in globalization and European studies in 100+ countries. From “Amsterdam University Press” via “Palgrave” and “Nova Science Publish," MPRA Paper 9613, University Library of Munich, Germany.
    13. Dennis Fredriksen & Erling Holmøy & Birger Strøm & Nils Martin Stølen, 2015. "Fiscal effects of the Norwegian pension reform. A micro-macro assessment," Discussion Papers 821, Statistics Norway, Research Department.
    14. Luis Moreno, 2019. "Robotization and Welfare Scenarios," Working Papers 1901, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    15. Eduardo Wiesner, 2008. "The Political Economy of Macroeconomic Policy Reform in Latin America," Books, Edward Elgar Publishing, number 12913.
    16. Torben M. Andersen, 2016. "Does The Public Sector Implode From Baumol'S Cost Disease?," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 810-818, April.

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    More about this item

    Keywords

    Sustainable fiscal policy; Baumol’s disease; Moral hazard; Automatic adjustment mechanisms;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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