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To Aid, Insurance, Transfer, or Control: What Drives the Welfare State?

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  • Edward Castronova

Abstract

The paper uses panel data on OECD countries to assess four theories about the forces that generate social spending. The four theories are: Aid: the Welfare State is about helping the poor. Insure: the Welfare State insures the consumption of middle-class voters. Transfer: the Welfare State transfers money to politically-powerful entitled groups. Control: the Welfare State is about controlling the behavior of the underclass. The data give the following grades: Aid D-, Insure C+, Transfer A-, Control D. This assessment is made by regressing the share of social spending in GDP on a vector of country characteristics. The methods involve simultaneous equation fixed-effects models, and they take advantage of some recent innovations in the growth literature involving the treatment of country-level panel data.

Suggested Citation

  • Edward Castronova, 2002. "To Aid, Insurance, Transfer, or Control: What Drives the Welfare State?," Discussion Papers of DIW Berlin 281, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp281
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    References listed on IDEAS

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    Cited by:

    1. Alla Kirova, 2011. "Evolution of the Human Capital Doctrine," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 94-131.

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    More about this item

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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