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Are public and private social expenditures complementary?

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  • Caminada, Koen
  • Goudswaard, Kees

Abstract

Most analyses of social protection are focussed on public arrangements. However, social effort is not restricted to the public domain; all kinds of private arrangements can be substitutes to public programs. OECD-data indicate that accounting for private social benefits and the impact of the tax system on social expenditure has an equalising effect on levels of social effort across a number of countries. This suggests complementarity between public and private social expenditures. Changes in the public/private mix in social protection will, however, have distributional effects. We expect that private schemes will generate less income redistribution than public programs. In this paper we will perform an empirical analysis. Using comparative international data we analyse whether there is a relationship between public and private social expenditures, and the distribution of income. We find a negative relationship between net public social expenditures and income inequality, but a positive relationship between net private social expenditures and income inequality across countries. In fact, when we incorporate private social security expenditures, the impact of total social expenditure on the income distribution becomes statistically trivial. We conclude that changes in the public/private mix in the provision of social protection may affect the redistributive impact of the welfare state.

Suggested Citation

  • Caminada, Koen & Goudswaard, Kees, 2004. "Are public and private social expenditures complementary?," MPRA Paper 20179, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:20179
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    References listed on IDEAS

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    8. Koen Caminada & Kees Goudswaard, 2001. "International Trends in Income Inequality and Social Policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(4), pages 395-415, August.
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    12. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    Citations

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    Cited by:

    1. Koen Caminada & Kees Goudswaard & Olaf Van Vliet, 2010. "Patterns of Welfare State Indicators in the EU: Is there Convergence?," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 529-556, June.
    2. Tomassi, Federico, 2011. "Equità sociale ed efficienza economica: La spesa sociale totale netta nei paesi Ocse tra il 2001 e il 2007
      [Social equality and economic efficiency: Net total social expenditure in the Oecd countri
      ," MPRA Paper 44378, University Library of Munich, Germany.
    3. Wang, Chen & Caminada, Koen, 2011. "Disentangling income inequality and the redistributive effect of social transfers and taxes in 36 LIS countries," MPRA Paper 32821, University Library of Munich, Germany.
    4. Chen Wang & Kees Goudswaard & Koen Caminada, 2012. "Disentangling Income Inequality and the Redistributive Effect of Taxes and Transfers in 20 LIS Countries Over Time Evidence from the LIS Data," LIS Working papers 581, LIS Cross-National Data Center in Luxembourg.
    5. Goudswaard, Kees & Caminada, Koen, 2008. "The redistributive impact of public and private social expenditure," MPRA Paper 20178, University Library of Munich, Germany.
    6. Caminada, Koen & Goudswaard, Kees & Koster, Ferry, 2010. "Social income transfers and poverty alleviation in OECD countries," MPRA Paper 20733, University Library of Munich, Germany.
    7. Caminada, Koen & Goudswaard, Kees, 2009. "Social expenditure and poverty reduction in the EU15 and other OECD countries," MPRA Paper 20138, University Library of Munich, Germany.
    8. Caminada, Koen & Goudswaard, Kees & Wang, Chen, 2012. "Disentangling income inequality and the redistributive effect of taxes and transfers in 20 LIS countries over time," MPRA Paper 42350, University Library of Munich, Germany.
    9. Koen Caminada & Chen Wang, 2011. "Disentangling Income Inequality and the Redistributive Effect of Social Transfers and Taxes in 36 LIS Countries," LIS Working papers 567, LIS Cross-National Data Center in Luxembourg.
    10. Martin, Megan & Caminada, Koen, 2009. "Welfare reform in the United States. A descriptive policy analysis," MPRA Paper 20139, University Library of Munich, Germany.
    11. Santacruz Cano, Javier & Bernal Alonso, Miguel Ángel, 2015. "Efficiency in Pension Funds Management in a QE Environment: The Case of Spain/Eficiencia en la gestión de los fondos de pensiones en un entorno de QE: El caso de España," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 33, pages 687-700, Septiembr.
    12. Caminada, Koen & Goudswaard, Kees, 2008. "Effectiveness of poverty reduction in the EU: A descriptive analysis," MPRA Paper 20167, University Library of Munich, Germany.
    13. Koen Caminada & Jinxian Wang & Kees Goudswaard & Chen Wang, 2017. "Income inequality and fiscal redistribution in 47 LIS-countries, 1967-2014," LIS Working papers 724, LIS Cross-National Data Center in Luxembourg.
    14. Van Vliet, Olaf & Been, Jim & Caminada, Koen & Goudswaard, Kees, 2011. "Pension reform and income inequality among the elderly in 15 European countries," MPRA Paper 32940, University Library of Munich, Germany.

    More about this item

    Keywords

    Public/Private-Mix; Social Protection; Income Distribution;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • D3 - Microeconomics - - Distribution

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