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The efficiency of expenditure-related redistributive policies in the European countries

  • Cosmin Eugen ENACHE

    (Faculty of Economics and Business Administration, West University of Timisoara, Romania)

For the sample of European Union countries, the efficiency of social protection public expenditures in providing income support and diminishing income inequality is assessed using a two-step Data Envelopment Analysis. This paper adds to the literature in three ways. First, for each country, efficiency scores are derived using an input-oriented variable returns to scale model. As expected, the least efficient redistributive policies were found for countries with generous welfare systems. Second, the efficiency scores are calculated for two periods, before and after the recent economic crisis. The results obtained in this stage of the analysis highlighted the negative impact of the crisis on social protection public expenditure efficiency. Third, other non-discretionary determinants of social protection public expenditures were highlighted as well, using a censored normal Tobit estimation and an additional OLS estimation. The results were robust to the method of estimation and pointed out that higher efficiency scores are associated with higher employment rates and lower dependency ratios.

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Article provided by West University of Timisoara, Romania, Faculty of Economics and Business Administration in its journal Timisoara Journal of Economics.

Volume (Year): 5 (2012)
Issue (Month): 18 ()
Pages: 380-394

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Handle: RePEc:wun:journl:tje:v05:y2012:i18:a10
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