Year: 2007
Type: conference-paper
Abstract: Can European welfare states rise to the challenge of financing the growing demands placed on them by demography, rising consumer expectations, international competition and growing inequality in market incomes?Can they do so without seriously jeopardising the efficiency of their economies?I think the hard headed answer is: maybe but it will take a lot of adaptation in the institutions that we think of as constituting the welfare state.I shall give some examples.First, I begin with some definitions. Welfare states and efficiencyBy a 'welfare state' I mean those activities of the state which redistribute households' claims over resources.In a pure capitalist economy these claims derive entirely from a household's success in labour and capital markets.The result may be a degree of inequality citizens as a whole find unacceptable -the utility they derive from their individual incomes is reduced by the nature of the resulting societal distribution (Atkinson 1970).The rapid growth in inequality in the UK in the 1980s and 1990s became a major issue of public concern.In 'welfare states' these market derived claims over resources are mitigated to varying degrees by the moral and political claims that derive from individuals' status as human beings and citizens of a particular nation.In Europe these claims are increasingly coming to be framed in terms of European citizenship.(For the origins of the term and societal differences in its form see: Hennessy 1992 and Glennerster 2007; Esping-Andersen 1990).Many collectively provided services serve another economic purpose, however.They provide alternatives to private market exchanges that exhibit serious market failures and are therefore, in principle, improve economic efficiency.Welfare states can, in short, be efficiency enhancing as well as equity enhancing (Barr 2004).Yet, for all the reasons Okun (1975) classically and Professor Lindbeck (1995) more recently have elaborated, they may also have efficiency damaging results.
Author: Howard Glennerster
Language: English
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2244276261