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European Integration and the Future of the Welfare State

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  • Sinn, Hans-Werner

Abstract

This paper argues that increased factor mobility incurs the risk of dismantling the welfare state, even though this state may have useful allocative functions. It will be difficult to finance the welfare state with taxes on capital and it may be necessary to subsidize this factor in the sense that some of the infrastructure it uses will have to be covered by taxes on other factors. In general, redistribution activities are underprovided, since they provide other countries with positive policy externalities. To overcome these difficulties and to make competition among welfare states workable, the paper suggests taxing capital income on a cash flow basis and other incomes on the basis of a nationality principle.

Suggested Citation

  • Sinn, Hans-Werner, 1998. "European Integration and the Future of the Welfare State," CEPR Discussion Papers 1871, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1871
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    1. Howitt, Peter & Sinn, Hans-Werner, 1989. "Gradual Reforms of Capital Income Taxation," American Economic Review, American Economic Association, vol. 79(1), pages 106-124, March.
    2. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-774, September.
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    4. Siebert, Horst, 1997. "Disziplinierung der nationalen Wirtschaftspolitik: durch die internationale Kapitalmobilität," Kiel Working Papers 832, Kiel Institute for the World Economy (IfW Kiel).
    5. Agell, Jonas & Englund, Peter & Sodersten, Jan, 1996. "Tax Reform of the Century -- the Swedish Experiment," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(4), pages 643-664, December.
    6. Charles M. Tiebout, 1961. "An Economic Theory of Fiscal Decentralization," NBER Chapters, in: Public Finances: Needs, Sources, and Utilization, pages 79-96, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alan B. Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
    2. Karl, Helmut (ed.), 2015. "Koordination raumwirksamer Politik: Mehr Effizienz und Wirksamkeit von Politik durch abgestimmte Arbeitsteilung," Forschungsberichte der ARL, ARL – Akademie für Raumentwicklung in der Leibniz-Gemeinschaft, volume 4, number 4, September.
    3. Berthold Norbert & Neumann Michael, 2004. "Ballungsprozesse im Standortwettbewerb der deutschen Bundesländer," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 55(1), pages 169-190, January.
    4. Hans-Werner Sinn, 1999. "Inflation and Welfare: Comment on Robert Lucas," NBER Working Papers 6979, National Bureau of Economic Research, Inc.
    5. Alan Krueger, 1999. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," Working Papers 803, Princeton University, Department of Economics, Industrial Relations Section..
    6. Durevall, Dick & Henrekson, Magnus, 2011. "The futile quest for a grand explanation of long-run government expenditure," Journal of Public Economics, Elsevier, vol. 95(7), pages 708-722.
    7. Silke Uebelmesser, 2004. "Harmonisation of Old-age Security Within the European Union," CESifo Economic Studies, CESifo Group, vol. 50(4), pages 717-743.
    8. Jacques H. Dreze, 2000. "Economic and Social Security in the Twenty‐first Century, with Attention to Europe," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 327-348, September.
    9. Pistoresi, Barbara & Rinaldi, Alberto & Salsano, Francesco, 2017. "Government spending and its components in Italy, 1862–2009: Drivers and policy implications," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 1117-1140.
    10. Alho, Kari E., 2002. "Labour Markets and Immigration Connected to Enlargement," Discussion Papers 791, The Research Institute of the Finnish Economy.
    11. Krieger, Tim, 2005. "Renten und Zuwanderung: Ein Überblick über neue Ergebnisse der Forschung," Arbeitspapiere der Nordakademie 2005-04, Nordakademie - Hochschule der Wirtschaft.
    12. Fehn, Rainer, 2001. "Institutioneller Wettbewerb und soziale Sicherungssysteme in Europa," Discussion Paper Series 45, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    13. Berthold, Norbert & von Berchem, Sascha, 2005. "Lokale Solidarität: die Zukunft der Sozialhilfe?," Discussion Paper Series 76, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    14. Berthold, Norbert & Neumann, Michael, 2006. "Europas Sozialstaaten im Schatten der Globalisierung," Discussion Paper Series 88, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    15. Krueger, Alan B., 2000. "From Bismarck to Maastricht: The March to European Union and the Labor Compact1," Labour Economics, Elsevier, vol. 7(2), pages 117-134, March.
    16. repec:bla:scandj:v:102:y:2000:i:3:p:327-48 is not listed on IDEAS
    17. Jerger, Jurgen, 2002. "Globalization, wage setting, and the welfare state," Journal of Policy Modeling, Elsevier, vol. 24(1), pages 1-18, March.
    18. Leon Bettendorf & Joeri Gorter & Albert van der Horst, 2006. "Who benefits from tax competition in the European Union?," CPB Document 125, CPB Netherlands Bureau for Economic Policy Analysis.
    19. Susanna Kochskämper, 2011. "Krankenversicherung in der Europäischen Union: Versicherungspflicht, Wanderungskosten und das Recht auf Freizügigkeit," Otto-Wolff-Institut Discussion Paper Series 05/2011, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.

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    More about this item

    Keywords

    European Integration; Welfare State;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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