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Explaining Welfare State Survival: The Role of Economic Freedom and Globalization

Using the economic freedom index and the newly developed KOF-index of globalization, it is shown that the Scandinavian welfare states have experienced faster, bigger and more consistent increases in these areas, compared to the smaller European and the so called liberal welfare states. The market economy and globalization hence do not pose threats to these welfare states, but are instead neglected factors in explaining their survival and good economic performance. Big government decreases the economic freedom index by definition, but the welfare states compensate in other areas, such as legal structure and secure property rights.

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Paper provided by The Ratio Institute in its series Ratio Working Papers with number 101.

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Length: 23 pages
Date of creation: 02 Jun 2006
Date of revision:
Handle: RePEc:hhs:ratioi:0101
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  1. Peltzman, Sam, 1980. "The Growth of Government," Journal of Law and Economics, University of Chicago Press, vol. 23(2), pages 209-87, October.
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  15. Ohlsson, H. & Agell, J. & Lindh, T., 1995. "Growth and the Public Sector: A Critical Review Essay," Papers 1995-09, Uppsala - Working Paper Series.
  16. Snower, Dennis J, 1993. "The Future of the Welfare State," Economic Journal, Royal Economic Society, vol. 103(418), pages 700-717, May.
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  19. Karl Ove Aarbu & Thor Olav Thoresen, 1997. "The Norwegian Tax Reform; Distributional Effects and the High-income Response," Discussion Papers 207, Statistics Norway, Research Department.
  20. Doucouliagos, Chris & Ulubasoglu, Mehmet Ali, 2006. "Economic freedom and economic growth: Does specification make a difference?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 60-81, March.
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