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International Integration and the Welfare State

Author

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  • Torben M. Andersen

    (Department of Economics, University of Aarhus, Denmark)

Abstract

This paper discusses how international integration affects the need and scope for welfare state activities. The first part reviews the main mechanisms, which have been considered in the literature, namely, tax base mobility, risk and race to the bottom effects in welfare policies. The second part considers in more detail the implications that arise via labour market effects, and it is argued that the latter are crucial since product market integration affects the mobility of jobs, even though labour mobility across nations remains small. This may in turn have important consequences for the financing of welfare state activities through taxes levied on labour, but also the need for welfare state activities. The paper ends by discussing some policy options.

Suggested Citation

  • Torben M. Andersen, "undated". "International Integration and the Welfare State," Economics Working Papers 2002-2, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2002-2
    as

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    File URL: https://repec.econ.au.dk/repec/afn/wp/02/wp02_2.pdf
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    References listed on IDEAS

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    13. Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 15(30), pages 48-104.
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    15. Andersen, Torben M. & Rasmussen, Bo Sandemann & Sorensen, Jan Rose, 1996. "Optimal fiscal policy in open economies with labour market distortions," Journal of Public Economics, Elsevier, vol. 63(1), pages 103-117, December.
    16. Torben M. Andersen & Niels Haldrup & Jan Rose Sørensen, 2000. "Labour market implications of EU product market integration," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 15(30), pages 106-133.
    17. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
    18. Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 505-525, January.
    19. Holmlund, Bertil & Kolm, Ann-Sofie, 1999. "Economic Integration, Imperfect Competition, and International Policy Coordination," Working Paper Series 1999:7, Uppsala University, Department of Economics.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. König, Jan & Skupnik, Christoph, 2012. "Labor market integration of migrants: Hidden costs and benefits in two-tier welfare states," Discussion Papers 2012/5, Free University Berlin, School of Business & Economics.
    2. Chen, Yu-Fu & Görg, Holger & Görlich, Dennis & Molana, Hassan & Montagna, Catia & Temouri, Yama, 2014. "Globalisation and the Future of the Welfare State," IZA Policy Papers 81, Institute of Labor Economics (IZA).
    3. Andersen, Torben M., 2004. "Challenges to the Scandinavian welfare model," European Journal of Political Economy, Elsevier, vol. 20(3), pages 743-754, September.
    4. Bruno Amable & Donatella Gatti & Jan Schumacher, 2006. "Welfare-State Retrenchment: The Partisan Effect Revisited," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(3), pages 426-444, Autumn.
    5. Amable, Bruno & Gatti, Donatella, 2004. "The Political Economy of Job Protection and Income Redistribution," IZA Discussion Papers 1404, Institute of Labor Economics (IZA).
    6. Narmin BAGHIRZADE, 2020. "Assessing Welfare States – Risk And Capability Of Trust," Law, Society & Organisations, Romanian Foundation for Business Intelligence, Editorial Department, issue 9 (2/2020, pages 87-93, December.
    7. Torben M. Andersen, 2016. "Incentives versus insurance in the design of tax-financed unemployment insurance," International Journal of Economic Theory, The International Society for Economic Theory, vol. 12(2), pages 127-150, June.
    8. Andersen, Torben M, 2010. "Incentive and Insurance Effects of Tax Financed Unemployment Insurance," CEPR Discussion Papers 8025, C.E.P.R. Discussion Papers.
    9. repec:bla:scandj:v:104:y:2002:i:3:p:343-64 is not listed on IDEAS
    10. Michele Di Maio, 2006. "Uncertainty, Gains from Specialization and the Welfare State," Working Papers 36-2006, Macerata University, Department of Finance and Economic Sciences, revised Oct 2008.

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    More about this item

    Keywords

    Risk; welfare policies; taxation; globalisation;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F10 - International Economics - - Trade - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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