A social investment perspective on public sector spending

Chapter 11 focus on the possible influence of the public sector on the overall economic development, especially when focusing on issues outside purely public goods, as well as on broader societal development. This includes a need to investigate public sector economics not only in the short run, but also what might work and influence the development in the longer-term perspective. This is part of the debate as to whether the public sector is a burden for societies or part of the solution for a better society. Thus, the chapter presents the idea of social investment, but also the possible difficulties in measuring it, and possible ethical challenges of using a social investment perspective in public sector economics. Lastly, the chapter looks into the possible dynamic impact of different types of public sector spending, as well as the discussion on what happens to the labour supply as a consequence of changes in the income tax system. It also discusses whether, even if knowing that there might be a positive impact on certain types of spending, one is able to measure the size and impact of a marginal change in spending in one area.