The sum of all knowledge on the welfare state

Okay, not quite. But the just-published Oxford Handbook of the Welfare State, which weighs in at 48 chapters and 912 pages, does cover a good bit of what we know about social policy in the world’s rich nations. Here’s what the book offers by way of answers to a few fundamental questions:

1. What is “the welfare state”? The book has chapters on the following government transfer and service programs: old-age pensions, work accident and sickness benefits, disability benefits, unemployment insurance, social assistance, health care, housing, family benefits and services, education, and labor market activation.

2. When and where did the welfare state originate? “The Elizabethan Act for the Relief for the Poor of 1601 established a national system — to be administered by parishes — for the relief of destitute children, the disabled and infirm, the unemployed and the work-shy. The Prussian Landrecht of 1794 gave the state a clear patriarchal responsibility for the poor, but it was delegated to local communities to provide social care.” Social insurance programs such as contributory pensions, work accident compensation, and sickness compensation originated in Germany under Bismarck in the 1880s. See chapter 5.

3. How large are welfare states? Government net social expenditures averaged 20% of GDP in twenty longstanding democratic countries as of the mid-2000s (this excludes education, which adds another 5%). France, Germany, Belgium, and Sweden led the way at 23-26%. At the low end were Ireland, New Zealand, Australia, Canada, and the United States at 15-17%. Note that how much governments spend on social policy depends not only on how generous the programs are but also on how many people are in need (elderly, sick, unemployed, etc.). See chapters 8, 23.

4. How generous are welfare states? Generosity consists of eligibility criteria, benefit levels, duration, and other elements. One partial but helpful measure is an average of the benefit replacement rates (the share of your former earnings that you receive) for pensions, unemployment insurance, and sick pay. As of 1995, the most recent year for which data are provided in the book, the average for eighteen countries was 60%, ranging from around 35% in the United States, United Kingdom, and Ireland to just shy of 80% in Sweden, Norway, and Austria.

5. What are the most expensive welfare state programs? Pensions, health care, and education, by far. See chapters 23-25, 34.

6. When did welfare states get large? Roughly 1910 to 1980, and particularly in the 1960s and 1970s. See chapter 6.

7. Have thirty years of heightened competition, globalization, and neoliberalism decimated welfare states? No, the share of GDP going to social policy expenditures hasn’t decreased on average. Some countries have reduced the generosity of certain programs, such as pensions, unemployment insurance, sickness/disability compensation, and social assistance. But these cuts have been offset by increases in need (more elderly households, higher unemployment), rising health care costs, and new programs such as child care and other family benefits. See chapters 22, 23, 35, 38.

8. Why did the welfare state come to vary so much across the rich countries? Largely due to differences in the organization of workers and employers, in the influence of left and Christian Democratic (Catholic center-right) political parties, and in the structure of political institutions. See chapters 13-15, 40-43.

9. Have welfare states converged? Yes in certain policy areas, such as labor market activation and long-term health services, but overall very little. See chapters 23-35, 39-43.

10. What do welfare states attempt to accomplish? The principal goals are economic security and redistribution. An increasingly-prominent third aim is labor market participation and success. It’s noteworthy that Denmark and Sweden, two countries with very generous cushions, also are the biggest spenders on education, active labor market programs, and child care. See chapters 23, 30, 32, 34, 40.

11. Have welfare states enhanced economic security? Yes. See chapters 6, 24-33.

12. Have welfare states reduced poverty? Yes. See chapter 36.

13. Have welfare states reduced income inequality? Yes. See chapter 36.

14. Have welfare states increased employment or reduced it? The evidence is mixed. See chapter 37.

15. Have welfare states impeded economic growth? Here too the evidence is mixed. See chapter 37.

5 thoughts on “The sum of all knowledge on the welfare state

  1. Thanks for the great precis, Lane. Not being a professional in the field, I can’t justify the 85 pounds to buy the book, so would much appreciate equally cogent precis of these areas:

    11. Have welfare states enhanced economic security? Yes. See chapters 6, 24-33.

    12. Have welfare states reduced poverty? Yes. See chapter 36.

    13. Have welfare states reduced income inequality? Yes. See chapter 36.

    14. Have welfare states increased employment or reduced it? The evidence is mixed. See chapter 37.

    15. Have welfare states impeded economic growth? Here too the evidence is mixed. See chapter 37.

    Thanks,

    Steve

  2. I was in a similar — though not the same — position last year when I wondered about buying the Oxford Handbook of Economic Inequality. I was surprised at how much of the book I could get on the web through earlier versions of chapters by the authors on their websites. Not precises [is that the plural?], but it was access without hefting out the price.

  3. Welfare states are much older than that. Check out the business, legal and tax codes of the Old Testament. Farmers were not allowed to reap the grain at the edge of their fields, nor could they pick up any grain that they dropped. That was for the poor. All debts and land transactions were canceled every seven years. I presume that the markets discounted ownership transfers accordingly. Every town was required to provide food and lodging to any strangers and their own poor. The O.T. goes on and on about this, and presumably is just reflecting far older customs.

  4. Just finished reading Sandra Halperin’s War and Social Change: The Great Transformation Revisited, on Europe 1814-1960. One point she makes strongly is that “state” welfare was the norm up to the 1780s (Poor Laws. state-supported church institutions, strong expectations that the wealthy would share..). Elite attacks on welfare (basically, escape from social restrictions) led to a century of class and state war, which ended when they were re-instated.

    A moral here?

  5. Dear Prof. Kenworthy, I was wondering if you could tell me what the Blog “Nordicmodel” is about?

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