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Globalisation and Social Spending

Author

Listed:
  • Paul De Grauwe

    () (K.U.Leuven, C.E.S., International Economics)

  • Magdalena Polan

    () (K.U.Leuven, C.E.S., International Economics)

Abstract

We provide evidence indicating that countries with well-developed social security systems do not necessarily face a trade-off between social spending and competitiveness. On average, countries that spend a lot on social needs score well in the competitiveness league. We investigate the importance of a reverse causality from competitiveness to social spending, and find that this is weak. We also present some possible explanations for our empirical finding. Finally, we interpret our findings in the framework of a theoretical model in which risk affects the size of the social sector and in which social spending affects the production function of the private sector.

Suggested Citation

  • Paul De Grauwe & Magdalena Polan, 2003. "Globalisation and Social Spending," International Economics Working Papers Series wpie011, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, International Economics.
  • Handle: RePEc:kul:kulwps:wpie011
    as

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    File URL: http://www.econ.kuleuven.ac.be/ew/academic/intecon/publications/wpie011.pdf
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    References listed on IDEAS

    as
    1. Federico Bonaglia & Jorge Braga de Macedo & Maurizio Bussolo, 2009. "How Globalisation Improves Governance," Chapters,in: The Law and Economics of Globalisation, chapter 7 Edward Elgar Publishing.
    2. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Bernadeta Baran, 2015. "Welfare State Challenges And The Concept Of Basic Income," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 9(1), pages 275-289.
    2. Molana, Hassan & Montagna, Catia, 2006. "Aggregate scale economies, market integration, and optimal welfare state policy," Journal of International Economics, Elsevier, pages 321-340.
    3. DUMONT, Michel, "undated". "The social consequences of economic globalization," Working Papers 2006025, University of Antwerp, Faculty of Applied Economics.

    More about this item

    Keywords

    economic integration; globalisation; terms-of-trade variability; international trade;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration

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