Work

On marketization and public spending growth

Year: 2024

Type: article

Abstract: I contribute to the literature on the growth of public spending in Western economies with a novel mechanism that ties it to the marketization process, i.e. the substitution of home with market production. I argue that a key contributor to the expansion of social spending is the replacement of family-based transfers with public pensions and other public transfer programs. I provide empirical support for this hypothesis by establishing the long-run relationship between government size and marketization, alongside other established determinants of government spending, in a panel of Western economies. I then illustrate a potential mechanism behind the results with a theoretical model in which, as a result of the productivity advantage of the market over the home sector, family-based intergenerational transfers decline unexpectedly, providing a rationale for government intervention in the form of public pensions with a poverty relief component.

Source: Journal of Demographic Economics

DOI: 10.1017/dem.2024.13

Author: Héctor Pifarré i Arolas

Institution: University of Wisconsin–Madison

Language: English

Topic: Social Policy and Reform Studies

Subfield: Political Science and International Relations

Field: Social Sciences

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,450