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Empirical Evidence for “Wagner’s Law of Increasing Government Activity” for Austria

In: Gustav von Schmoller and Adolph Wagner

Author

Listed:
  • Reinhard Neck

    (Alpen-Adria-Universität Klagenfurt)

  • Johannes Jaenicke

    (Alpen-Adria-Universität Klagenfurt)

Abstract

In this paper, we discuss what is known as “Wagner’s Law”, a proposition stated by Adolph Wagner relating to the long-run increase in government activities. We discuss problems of specifying and testing it and report on several tests for Austria, both for the Austrian part of the Habsburg Monarchy before World War I and the Second Republic of Austria after World War II. In neither period can we find evidence for Wagner’s Law. Instead, the growth in public expenditures in recent times seems to be driven by a discrepancy between wages and prices in the public sector as opposed to those in the private sector, as follows from Baumol’s “Cost Disease” hypothesis.

Suggested Citation

  • Reinhard Neck & Johannes Jaenicke, 2018. "Empirical Evidence for “Wagner’s Law of Increasing Government Activity” for Austria," The European Heritage in Economics and the Social Sciences, in: Jürgen Backhaus & Günther Chaloupek & Hans A. Frambach (ed.), Gustav von Schmoller and Adolph Wagner, pages 153-173, Springer.
    • Handle: RePEc:spr:euhchp:978-3-319-78993-4_11
    DOI: 10.1007/978-3-319-78993-4_11
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    H500; B310; O520; N130;
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