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The Birth and Growth of the Social Insurance State: Explaining Old-Age and Medical Insurance Across Countries

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  • Cutler, David
  • Johnson, Richard

Abstract

We seek to explain why countries have adopted national Old-Age Insurance and Health Insurance programs. Theoretical work has posited several factors that could lead to this adoption: the strain from expanding capitalism; the need for political legitimacy; the desire to transfer to similar people; increased wealth; and the outcome of leviathan government. We relate the probability of a country's creating social insurance to proxies for each of these theories. We find weak evidence that the probability of adopting a system declines with increases in wealth and with greater ethnic heterogeneity. Still, none of the theories is very strongly related to system adoption. We conclude that social insurance can be politically expedient for many different reasons.

Suggested Citation

  • Cutler, David & Johnson, Richard, 2004. "The Birth and Growth of the Social Insurance State: Explaining Old-Age and Medical Insurance Across Countries," Scholarly Articles 2643658, Harvard University Department of Economics.
  • Handle: RePEc:hrv:faseco:2643658
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    References listed on IDEAS

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    1. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    2. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
    3. Cukierman, Alex & Tommasi, Mariano, 1998. "When Does It Take a Nixon to Go to China?," American Economic Review, American Economic Association, vol. 88(1), pages 180-197, March.
    4. Willem Adema & Marcel Einerhand & Bengt Eklind & Jorgen Lotz & Mark Pearson, 1996. "Net Public Social Expenditure," OECD Labour Market and Social Policy Occasional Papers 19, OECD Publishing.
    5. Browning, Edgar K, 1975. "Why the Social Insurance Budget Is Too Large in a Democracy," Economic Inquiry, Western Economic Association International, vol. 13(3), pages 373-388, September.
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    Cited by:

    1. Vincenzo Galasso & Paola Profeta, 2010. "When the State Mirrors the Family: The Design of Pension Systems," CESifo Working Paper Series 3191, CESifo Group Munich.
    2. Perotti, Enrico & Schwienbacher, Armin, 2009. "The political origin of pension funding," Journal of Financial Intermediation, Elsevier, vol. 18(3), pages 384-404, July.
    3. Niklas Potrafke, 2012. "Is German domestic social policy politically controversial?," Public Choice, Springer, vol. 153(3), pages 393-418, December.
    4. VANNESTE, Jacques & ZHANG, Ying, 2012. "The impact of government expenditure on prepayment for health services: Evidence from cointegration analysis in heterogeneous panel data," Working Papers 2012029, University of Antwerp, Faculty of Applied Economics.
    5. Vincenzo Galasso & Paola Profeta, 2013. "From Family Culture to Welfare State Design," CHILD Working Papers Series 14, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    6. Goulão, Catarina, 2014. "Voluntary Public Health Insurance," TSE Working Papers 14-488, Toulouse School of Economics (TSE).
    7. Jäger, Philipp, 2017. "Bismarck in the bedroom? Pension reform and fertility: Evidence 1870-2010," Ruhr Economic Papers 677, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Huang, Wei & Zhang, Chuanchuan, 2016. "The Power of Social Pensions," IZA Discussion Papers 10425, Institute for the Study of Labor (IZA).
    9. Aggarwal, Raj & Goodell, John W., 2013. "Political-economy of pension plans: Impact of institutions, gender, and culture," Journal of Banking & Finance, Elsevier, vol. 37(6), pages 1860-1879.
    10. Feigl, Andrea B. & Ding, Eric L., 2013. "Evidenced Formal Coverage Index and universal healthcare enactment: A prospective longitudinal study of economic, social, and political predictors of 194 countries," Health Policy, Elsevier, vol. 113(1), pages 50-60.
    11. Catarina Goulão, 2015. "Voluntary public health insurance," Public Choice, Springer, vol. 162(1), pages 135-157, January.
    12. Jäger, Philipp, 2017. "Bismarck in the bedroom? Pension reform and fertility: Evidence 1870-2010," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168078, Verein für Socialpolitik / German Economic Association.

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