This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

The Efficiency-Equality Tradeoff in Welfare State Economies

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Radim Bohacek (CERGE-EI)

Additional information is available for the following registered author(s):

Abstract

This paper studies the effects of different levels of social insurance on efficiency and distribution of resources in a general equilibrium model of a closed economy with heterogeneous agents and moral hazard. I compare optimal allocations of capital, labor supply, and consumption in stationary recursive equilibria for economies with different guaranteed minimum consumption levels (social insurance). I show that the efficiency-equality tradeoff associated with welfare state economies does not hold. Efficiency decreases and equality rises as the minimal guaranteed consumption increases from zero to around one third of the average consumption. However, if social insurance expands even further, the efficiency loss becomes very high and equality worsens. Average welfare is greater in economies with high social insurance while the median agent is better off in economies with low social insurance. Finally, I study the transitions between welfare regimes' steady states to evaluate the effects of social insurance reforms.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://129.3.20.41/eps/mac/papers/0203/0203001.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number 0203001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 30 pages
Date of creation: 02 Mar 2002
Date of revision:
Handle: RePEc:wpa:wuwpma:0203001

Note: Type of Document - Acrobat PDF; pages: 30 ; figures: included
Contact details of provider:
Web page: http://129.3.20.41

For technical questions regarding this item, or to correct its listing, contact: (EconWPA).

Related research
Keywords:

Other versions of this item:

Find related papers by JEL classification:
E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

This paper has been announced in the following NEP Reports:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
  1. Radim Bohacek, 2001. "Capital Accumulation And Moral Hazard In An Economy With Heterogeneous Agents," CeNDEF Workshop Papers, January 2001 1B.2, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  2. Radim Bohacek, 2001. "Capital Accumulation in an Economy with Heterogeneous Agents and Moral Hazard," GE, Growth, Math methods 0012001, EconWPA. [Downloadable!]
  3. Radim Bohacek, 2000. "Capital Accumulation in an Economy with Heterogeneous Agents and Moral Hazard," CERGE-EI Working Papers wp165, The Center for Economic Research and Graduate Education - Economic Institute, Prague. [Downloadable!]
Statistics
Access and download statistics

Did you know? All bibliographic data on IDEAS has been put in the public domain by the publishers.

This page was last updated on 2009-11-3.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.