2006–2010

Sustainable Social Spending

Reprint No. 2006:24

Author(s): Assar LindbeckYear: 2006 Title: International Tax and Public Finance Volume (No.): 13 (4) Pages: 303–324


The paper discusses a number of threats to the financial sustainability of social spending: increased internationalization of national economies, gradually higher relative costs of producing a number of human services, the “graying” of the population, slower productivity growth in the private sector, low employment rates, and various types of disincentive effects related to the welfare state itself, including moral hazard. I argue that threats from gradually rising costs of providing human services and disincentive effects of welfare-state arrangements, in particular moral hazard and benefit dependency, are more difficult to deal with than the other threats. I also discuss the choice between ad hoc policy reforms and automatic adjustment mechanisms, delegated to administrative bodies, for dealing with these threats.


Reference:
Lindbeck, Assar (2006), "Sustainable Social Spending". International Tax and Public Finance 13(4), 303–324.

Assar Lindbeck

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assar.lindbeck@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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