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The Size and Composition of Government Spending in Europe and Its Impact on Well-Being

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  • Hessami, Zohal

Abstract

This paper analyses whether large governments in Europe reflect efficient responses to a changing social and economic environment (‘welfare economic view’) as opposed to wasteful spending (‘public choice view’). To this end, the effect of government size on subjective well-being is estimated in a micro dataset covering twelve EU countries from 1990 to 2000. The estimations provide evidence for (i) an inversely U-shaped relationship between public sector size and well-being. (ii) The effect of government size on well-being depends on levels of corruption and decentralization as well as people’s ideological preferences and their position in the income distribution. Finally, (iii) higher levels of well-being could have been achieved by spending more on education and less on social protection.

Suggested Citation

  • Hessami, Zohal, 2010. "The Size and Composition of Government Spending in Europe and Its Impact on Well-Being," MPRA Paper 21195, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:21195
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    Cited by:

    1. Luis Diaz‐Serrano & Andrés Rodríguez‐Pose, 2012. "Decentralization, Subjective Well‐Being, and the Perception of Institutions," Kyklos, Wiley Blackwell, vol. 65(2), pages 179-193, May.
    2. Alberto Montagnoli & Mirko Moro, 2014. "Everybody Hurts: Banking Crises and Individual Wellbeing," Working Papers 2014010, The University of Sheffield, Department of Economics.
    3. Sequeira, Tiago & Minas, Tiago & Ferreira-Lopes, Alexandra, 2014. "Do Large Governments Decrease Happiness?," MPRA Paper 54418, University Library of Munich, Germany.
    4. Alpaslan Akay & Olivier Bargain & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2012. "Happy Taxpayers? Income Taxation and Well-Being," SOEPpapers on Multidisciplinary Panel Data Research 526, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Bernd Hayo & Florian Neumeier, 2012. "Leaders’ Impact on Public Spending Priorities: The Case of the German Laender," Kyklos, Wiley Blackwell, vol. 65(4), pages 480-511, November.
    6. Rottmann, Horst, 2014. "Do unemployment benefits and employment protection influence suicide mortality? An international panel data analysis," Weidener Diskussionspapiere 42, University of Applied Sciences Amberg-Weiden (OTH).
    7. Zohal Hessami, 2010. "The Size and Composition of Government Spending in Europe and Its Impact on Well-Being," Kyklos, Wiley Blackwell, vol. 63(3), pages 346-382, August.
    8. Hessami, Zohal, 2011. "Globalization's winners and losers--Evidence from life satisfaction data, 1975-2001," Economics Letters, Elsevier, vol. 112(3), pages 250-253, September.
    9. Bodo Knoll & Hans Pitlik, 2016. "Who benefits from big government? A life satisfaction approach," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(3), pages 533-557, August.
    10. Kamal KASMAOUI & Othmane BOURHABA, 2017. "Happiness and Public Expenditure: Evidence from a Panel Analysis," Working Papers 2016-2017_8, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Apr 2017.
    11. Seoyong Kim & Donggeun Kim, 2012. "Does Government Make People Happy?: Exploring New Research Directions for Government’s Roles in Happiness," Journal of Happiness Studies, Springer, vol. 13(5), pages 875-899, October.
    12. Christian Breuer & Horst Rottmann, 2014. "Do Labor Market Institutions Influence Suicide Mortality? An International Panel Data Analysis," CESifo Working Paper Series 4875, CESifo Group Munich.
    13. Sujarwoto Sujarwoto & Gindo Tampubolon, 2015. "Decentralisation and Citizen Happiness: A Multilevel Analysis of Self-rated Happiness in Indonesia," Journal of Happiness Studies, Springer, vol. 16(2), pages 455-475, April.
    14. Eiji Yamamura, 2012. "The Effects of Information Asymmetry and Government Size on Happiness: A Case Study from Japan," The IUP Journal of Governance and Public Policy, IUP Publications, vol. 0(1), pages 7-20, March.

    More about this item

    Keywords

    Life satisfaction; well-being; public spending; government size;

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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