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An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale

  • Martin Halla
  • Mario Lackner
  • Friedrich G. Schneider

Does the supply of a welfare state create its own demand? Many economic scholars studying welfare arrangements refer to Say’s law and insinuate a self-destructive welfare state. However, little is known about the empirical validity of these assumptions and hypotheses. We study the dynamic effect of different welfare arrangements on benefit fraud. In particular, we analyze the impact of the welfare state on the respective social norm, i. e. benefit morale. It turns out that a high level of public social expenditures and a high unemployment rate are associated with a small positive (or no) immediate impact on benefit morale, which however is crowded out by adverse medium and long run effects.

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Paper provided by The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria in its series NRN working papers with number 2009-04.

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Length: 28 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:jku:nrnwps:2009_04
Contact details of provider: Postal: NRN Labor Economics and the Welfare State, c/o Rudolf Winter-Ebmer, Altenbergerstr. 69, 4040 Linz
Phone: +43-732-2468-8216
Fax: +43-732-2468-8217
Web page: http://www.labornrn.at/
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  8. Assar Lindbeck & Sten Nyberg, 2001. "Raising Children to Work Hard: Altruism, Work Norms and Social Insurance," CESifo Working Paper Series 498, CESifo Group Munich.
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  18. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  19. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
  20. Douglas Wolf & David Greenberg, 1986. "The Dynamics of Welfare Fraud: An Econometric Duration Model in Discrete Time," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 437-455.
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  25. Karen Mason & Lisa Cope, 1987. "Sources of age and date-of-birth misreporting in the 1900 U.S. census," Demography, Springer, vol. 24(4), pages 563-573, November.
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