Social policy and the least well-off

Lane Kenworthy, The Good Society
May 2025

Most of what we call social policy, or “the welfare state,” is actually public insurance.1 It’s a backstop against risk and loss, a safety net for individuals and families who otherwise might find themselves in dire straits. In addition to reducing anxiety, public insurance boosts the living standards of the poor. It increases their income, and it provides them with services for which they bear relatively little of the cost.

But do public social programs tend to hurt the poor in the long run by reducing employment and economic growth? Does the welfare state erode self-reliance? Is a large private safety net just as helpful to the least well-off as a large public one? Are universal programs more effective than targeted ones? How can we minimize administrative burdens that impede access to social programs? Does decentralized government authority result in less generous social policy? How important are public services in helping the least well-off?

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ARE SOCIAL PROGRAMS GOOD FOR THE POOR?

Many public social programs provide money to people who have little earnings or who are experiencing a temporary or long-term condition that limits their ability to work. These programs include unemployment insurance, sickness insurance, paid parental leave, disability compensation, social assistance, old-age pensions, and others. They are a key source of income for many individuals and households at the low end of the socioeconomic ladder.2

Some, however, contend that government social programs weaken work incentives, disrupt markets, and waste resources. They might therefore help the poor in the short run but hinder their progress in the long run by reducing employment and economic growth.3

Any program that allows people to survive without employment will cause some reduction in work effort. This is unavoidable. Even America’s low social assistance benefits induce some adults who could work to choose not to.4 Similarly, any tax will cause some individuals or firms to cut back on investment. And any government program will feature some inefficiency and waste. But unless these effects are large, the damage is likely to be outweighed by social programs’ benefits for the least well-off. Plainly there is some level of generosity at which social programs will do more harm than good. Have existing rich nations passed this tipping point?5

In a few instances they have. The Netherlands’ disability program in the early 1980s created strong incentives for people to drop out of the labor force. In Denmark, prior to the mid-1990s there was no de facto limit on the duration of eligibility for unemployment compensation. In Sweden, sickness insurance was the chief culprit, as Jonas Agell details: “According to the rules in place by the end of the 1980s, employees were entitled to a 90% compensation level from the first day of reporting sick. Due to supplementary insurance agreements in the labour market, however, many employees had a compensation level of 100%. For the first seven days of sickness leave, a physician’s certificate was not required. If individuals ever respond to economic incentives, work absenteeism ought to have been widespread in Sweden. The increase in the average number of sickness days per insured employee from 13 days in 1963 to 25 days in 1988 can hardly be attributed to a deteriorating health status of the population.”6

But each of these problems was recognized and eventually corrected. And a number of countries, led by the Nordics, have introduced and expanded programs such as childcare and retraining that encourage employment.7 Also, by limiting the risk of personal financial catastrophe, public social programs facilitate entrepreneurship and mobility.8

What does the comparative experience tell us about the effect of social program expansiveness and generosity on economic growth and employment over the four decades from 1979 to 2019?9 Figure 1 considers economic growth. On the horizontal axis is the share of GDP spent on public (and mandated private) social programs.10 The measure is adjusted for the share of the population that is elderly and the share that is unemployed, as expenditures will automatically be greater when either of these is higher, irrespective of the generosity of the programs. There is no indication of an adverse effect of social programs on economic growth. On average, growth rates have been similar regardless of the size of the welfare state.11

Figure 1. Social policy and economic growth
Social policy: government social expenditures and mandated private social expenditures as a share of GDP, adjusted for the share of the population age 65 and over and for the unemployment rate. Adjusted expenditures = expenditures + (0.5 x (22.3 – (elderly share of the population + unemployment rate))). Each percentage point of the elderly share and/or unemployment is estimated to cost about 0.5% of GDP. The average for the elderly share plus the unemployment rate across all countries and years is 22.3. The data include spending on transfers and services in nine areas of social policy: old age, survivors, incapacity-related benefits, health, family, active labor market programs, unemployment, housing, and “other.” 1980-2019. Data source: OECD Data Explorer, “Social expenditure aggregates.” Economic growth: average rate of growth of inflation-adjusted and purchasing-power-parity-adjusted gross domestic product (GDP) per capita, 1979 to 2019. Economic growth is adjusted for starting level of GDP per capita; the vertical-axis measure is the residuals from a regression of average economic growth on 1979 level of GDP per capita. Higher on the vertical axis indicates faster catchup-adjusted growth. Data source: OECD. “Asl” is Australia; “Aus” is Austria. The lines are linear regression lines. The solid line is calculated with all countries included. The dashed line is calculated with Korea omitted.

Figure 2 does the same for employment, measured as the share of the working-age population that is employed. Once again we see no indication that social policy expansiveness and generosity has had a damaging effect. If anything, countries that spend more on social programs tend to have higher, not lower, employment rates.12

It’s also worth noting that the employment rate increased in nearly all of the countries during this period, in some cases by quite a bit.13 That’s not what we would expect to see if generous public insurance programs were inducing large numbers of able adults to withdraw from the labor market.

Figure 2. Social policy and employment
Social policy: see the note to figure 1. Employment rate: employed persons age 25-64 as a share of the population age 25-64. 1980 to 2019. Data source: OECD. “Asl” is Australia; “Aus” is Austria. The line is a linear regression line.

What do we see when we look across countries at a measure that gets directly at the living standards of the least well-off? The vertical axis of figure 3 has a widely-used indicator: the relative poverty rate. This is calculated, for each country, as the share of people living in households with an income below 60% of the country’s median income. On the horizontal axis is public social expenditures as a share of GDP. There is a strong correlation; countries with a bigger welfare state tend to have lower relative poverty rates.14

Figure 3. Social policy and relative poverty
Social policy: see the note to figure 1. Relative poverty: share of persons in households with income below 60% of the country’s median income. 1980 to 2019. Data sources: Luxembourg Income Study; OECD. “Asl” is Australia; “Aus” is Austria. The line is a linear regression line. The correlation is –.78.

What if we assess the living standards of the least well-off via an absolute measure rather than a relative one? The vertical axis in the next chart, figure 4, shows the income of a household at the tenth percentile of the distribution (90% of households have larger incomes, and 10% have smaller ones). The incomes of low-end households tend to be higher in nations with more expansive and generous social programs.

Figure 4. Social policy and 10th-percentile household income
Social policy: see the note to figure 1. P10 household income: posttransfer-posttax income at the 10th percentile of the income distribution. 1980 to 2019. The incomes are adjusted for household size and then rescaled to reflect a three-person household, adjusted for inflation, and converted to US dollars using purchasing power parities. “k” = thousand. Data sources: Luxembourg Income Study; OECD. “Asl” is Australia; “Aus” is Austria. The line is a linear regression line. The correlation is +.59.

A more direct indicator of material well-being is people’s responses to questions about their living conditions. Since 2007, the Gallup World Poll has asked a representative sample of adults in each country whether there has been a time in the past year when they didn’t have enough money to (a) buy food that they or their family needed or (b) provide adequate shelter or housing. On the vertical axis in figure 5 is the average share of households responding yes to these two questions. The share ranges from 5% in Denmark to 15% in the United States and 20% in South Korea. Here too we see a tendency for countries with a bigger welfare state to do better.

Figure 5. Social policy and material hardship
Social policy: see the note to figure 1. Material hardship: average share of adults responding yes to the question “Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?” and the question “Have there been times in the past 12 months when you did not have enough money to provide adequate shelter or housing for you and your family?” 2007-2017. Data source: Gallup World Poll, via the Legatum Prosperity Index. “Asl” is Australia; “Aus” is Austria. The line is a linear regression line. The correlation is –.66.

So public insurance programs do tend to help the poor.15

There is more to the story. Economies in the world’s affluent countries have experienced profound changes since the 1970s. With globalization, the advance of computers and robots, increased pressure from shareholders for short-run profit maximization, union weakening, and other shifts, wages have been under pressure. Couple this with the fact that many people at the low end of the income ladder have labor market disadvantages — disability, family constraint, geographic vulnerability to structural unemployment — and we have a recipe for stagnation in the market incomes of the poor. In most of these countries that is exactly what’s happened. Consequently, the chief source of income gain for the least well-off has been increases in government transfers.16

This helps us to answer a question frequently raised by welfare state critics: If public insurance programs help the poor, why has there been relatively little decrease in poverty in the United States since the 1970s? The reason is that the market incomes of low-end households haven’t increased much, due to wage and employment stagnation, and in the US, unlike in many other affluent nations, income transfers to the working-aged poor also haven’t increased much. The result has been disappointingly limited progress in boosting the incomes of the least well-off.17

DOES PUBLIC INSURANCE TURN US INTO MOOCHERS?

Set aside social policy’s economic impact for a moment. Another prominent concern is that it has troubling moral consequences — specifically, that it breeds dependency. Mitt Romney, the 2012 Republican presidential nominee, famously quipped that there are “47 percent of Americans … who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it — that that’s an entitlement and the government should give it to them.”18

Nicholas Eberstadt makes a more detailed case for this sentiment in his book A Nation of Takers.19 Eberstadt notes that over the past half century, the share of Americans who receive a government cash transfer and/or public health insurance — Social Security, Medicare, Medicaid, unemployment compensation, and so on — has grown steadily. The United States, he concludes, is now “on the verge of a symbolic threshold: the point at which more than half of all American households receive, and accept, transfer benefits from the government.” According to Eberstadt, growing reliance on government for help is undermining Americans’ “fierce and principled independence,” our “proud self-reliance.”

Is this a genuine cause for concern? In Eberstadt’s view, people are either givers or takers — taxpayers or benefit recipients. But that’s mistaken. Every adult who doesn’t live entirely off the grid pays some taxes: anyone who is an employee pays payroll taxes, and anyone who purchases things at a store pays sales taxes. Likewise, virtually every American receives benefits from government, whether it’s attending a public school, driving on roads, drinking tap water or taking a shower in your dwelling, not being stricken by polio, not having a band of thugs remove you from your home at gunpoint, visiting a park or lounging on a beach or hiking a mountain trail, using the internet, and on and on. And nearly all Americans receive a government cash or near-cash transfer at some point in their life: more than half of families with children receive the EITC; about 70% of us get income from SNAP (food stamps), TANF, SSI, or unemployment insurance; and more than 90% of the elderly get a Social Security check.20

It also isn’t clear that receiving a cash transfer from government renders people less self-reliant than receiving the myriad public goods, services, and tax breaks that government provides. Once upon a time, individuals and privately organized militias ensured the public safety. Then we shifted to government police forces and armies. At one point humans got their own water and disposed of their own waste. Then we created public water and sewage systems. The education of children was once a family responsibility. Then we created public schools. There’s a good reason for these shifts: government provision offers economies of scale and scope, which reduces the cost of a good or service and thereby makes it available to many people who couldn’t or wouldn’t get it on their own. Did Americans’ character or spirit diminish when these changes occurred? Is there something different about the more recent shift from individual to government responsibility in how we deal with retirement saving, healthcare, unemployment, and other risks?

Government provides more insurance and assistance now than it used to. All of us, not just some, are dependent on it. And life for almost everyone is better because of it.21

IS PRIVATE SOCIAL SPENDING JUST AS EFFECTIVE AS PUBLIC SPENDING?

Spending on social programs doesn’t have to be public. It doesn’t have to be done by the government. In fact, total social spending is greater in the United States than in social democratic archetypes Denmark and Sweden, because even though its public programs are less generous and expansive, the US has a lot more private spending on social transfers and services.22

However, America’s private social spending tends to be less helpful to the poor.23 Private social expenditures account for roughly two-fifths of the US social expenditure total. They consist mainly of employer health insurance and pension contributions. But people on the low end of the ladder often work for employers that don’t provide retirement or health benefits. Another type of private social expenditure is money put into tax-advantaged individual retirement accounts (IRAs) and health savings accounts (HSAs). These too are used mainly by persons and households with higher incomes.24

One way we can see the impact is in wealth in the lower part of the distribution. Figure 6 shows wealth at the 25th percentile of the distribution in the United States. The lower line includes financial assets, property assets, and the value of employer-based pensions (defined-benefit and defined-contribution). Americans at this point on the wealth ladder tend to have relatively little of any of these kinds of wealth, and that hasn’t improved much over the past several decades. The upper line adds the value of expected Social Security benefits. This makes a huge difference. When we include Social Security, a household in this lower part of the wealth distribution had around $180,000 in wealth as of 2022.

Figure 6. Wealth at the 25th percentile, with and without Social Security
Assets minus debts. Assets include marketable assets (cash, house, stocks, defined-contribution retirement accounts, etc), promised income from defined-benefit pension plans, and future streams of income from Social Security benefits. Inflation adjustment is via the PCE. “k” = thousand. Data source: Congressional Budget Office, “Trends in the Distribution of Family Wealth, 1989 to 2022,” supplemental data, figure 3, using data from the Survey of Consumer Finances and other sources.

The private safety net model has another important weakness: it fits poorly with employers’ need for flexibility and workers’ need for mobility. Tying a person’s health insurance and pension to a job doesn’t make much sense in a modern economy.25 Either is fine as a supplement, but it’s better if people’s main health insurance and retirement pension are independent of their employer.

UNIVERSAL OR TARGETED?

Generous public insurance is threatened by population aging, modest productivity growth, downward pressure on tax rates stemming from capital mobility, and, in some countries, persistent budget deficits.26 One possible response is to make greater use of targeting in social policy.27 Targeted transfers are directed (sometimes disproportionately, sometimes exclusively) to those with low incomes and assets, whereas universal transfers are provided to most or all citizens. Targeted programs are more efficient at reducing poverty; each dollar or euro or kroner transferred is more likely to go to the least well-off. Increased targeting therefore could be an effective way to maintain or enhance public insurance in the face of diminished resources.

But targeted programs tend to have political constituencies that are smaller and less cohesive, engaged, and influential, so targeted programs may end up less generous than universal programs, which have a broader political base.28 Consequently, while the needy get a smaller proportion of the transfers in universal programs, they may get a larger quantity of transfers from universal programs than from targeted ones.29 This led Walter Korpi and Joakim Palme to posit a paradox of redistribution: “the more we target benefits to the poor … the less likely we are to reduce poverty and inequality.”30

Is this correct? Do nations that rely more heavily on targeting achieve less redistribution? Korpi and Palme found that to be the case in the 1980s. Their measure of targeting-universalism is an index of concentration; it ranges from -1 if the poorest household gets all of the government transfer income (targeted) to 0 if all households get an equal amount of transfer income (universal). Their measure of redistribution is the percentage difference between pretransfer-pretax and posttransfer-posttax income inequality. Korpi and Palme found that the pattern across eleven affluent nations supported the hypothesis that greater use of targeting in transfers yields less redistribution.31

Subsequent studies have found that this correlation no longer holds.32 As figure 7 shows, as of the mid-2000s, countries that rely more heavily on targeting tend to achieve just as much redistribution as those with more universalistic policies.33

Figure 7. Redistribution by targeting-universalism
Targeting-universalism: Index of concentration, which equals -1 if the household with the lowest pretransfer-pretax income gets all of the government transfer income, 0 if all persons get an equal amount of transfer income, and +1 if the household with the highest pretransfer-pretax income gets all of the transfer income. Included are the following types of public transfers: pension benefits, child and family allowances, unemployment compensation, sick pay, accident pay, disability pay, maternity pay, military/veterans/war benefits, “other social insurance,” means-tested cash benefits, and “near-cash” benefits. Redistribution: Degree of inequality reduction relative to the degree of market inequality. Calculated as: ((pretransfer-pretax Gini coefficient – posttransfer-posttax Gini) / pretransfer pretax Gini) x 100. Data source: Ive Marx, Lina Salanauskaite, and Gerlinde Verbist, “The Paradox of Redistribution Revisited,” Discussion Paper 7414, Institute for Labor (IZA), 2013, using Luxembourg Income Study data.

What has changed? Recall that there are two steps in the hypothesized causal process. First, universalism is thought to increase the size of the redistributive budget. Second, larger redistributive budgets are said to increase redistribution. The quantity of government social expenditures, a measure of the size of the redistributive budget, remains a major determinant of how much redistribution takes place, but the universalism of transfer programs no longer seems to have much impact on the quantity of government social expenditures.34

What if we look over time within countries? All of the rich countries have faced pressure to reduce social policy generosity over the past several decades, due to economic globalization and to changes in the balance of power between unions and left parties on one side and employers and right parties on the other. If universalism is better for redistribution, nations with more universal social policy should have fared better in resisting this pressure for cutbacks.

It turns out, though, that they haven’t. In the United States, targeted (means-tested) programs such as Medicaid, Food Stamps (SNAP), and the Earned Income Tax Credit have fared just as well over time — and in some instances better — than universal programs such as Medicare, Social Security, and unemployment insurance.35 Analyses of other rich democratic countries have tended to reach a similar conclusion.36

The hypothesis that targeting in social policy reduces political support and thereby lessens redistributive effort is a sensible one. Yet the experience of the rich countries in recent decades suggests little support for it. Countries with more universalistic social policy don’t (any longer) tend to be more redistributive. Nor do we observe a systematic tendency for universal programs to grow and targeted programs to shrink over time.37 Targeting has drawbacks relative to universalism: more stigma for recipients, lower take-up rates, and possibly less social trust.38 But targeting is less expensive. As pressures to contain government expenditures mount, policy makers may therefore turn to greater use of targeting. That may not be a bad thing.

MINIMIZING ADMINISTRATIVE BARRIERS TO ACCESS

Eligibility rules, benefit levels, and duration limits are key determinants of the degree to which social programs help people. Another contributor is administrative barriers to access (“administrative burdens”). These barriers discourage eligible persons from applying for, remaining on, and renewing access to social programs, which reduces program participation. In the United States, for instance, nearly 100% of those eligible for Social Security actually receive the benefit, compared to 80% of those eligible for the Earned Income Tax Credit (EITC) and just 30% of persons eligible for TANF.39

Social program design and implementation should aim to maximize access rather than to minimize cheating. There are various ways to accomplish this.40

Outreach. “Outreach matters in three ways. First, the provision of information can reduce the learning costs of finding out about the existence of the program and understanding eligibility. Second, the ability of outreach workers to directly provide a helping hand to individuals completing applications reduces compliance burdens and raises application completion rates. Third, if done well, outreach that uses nonprofits and health-care providers who are known to and trusted by the target population can reduce psychological [stigma] costs. Outreach workers are more likely to be recognized as advocates for the individual, and applicants are likely to encounter peers also seeking to receive benefits.”41

Simple, intelligible rules. The average adult struggles to understand written rules. Rules governing eligibility, benefits, duration, re-enrollment, and other aspects of social programs should be written as simply and concisely as possible. This is more easily accomplished when the rules themselves are simple.

Multiple ways to apply. Where recipients are required to apply, they should be able to do so in person, by mail, by phone, or online. And third parties and other government agencies — community groups, hospitals, churches, drivers license offices — should be allowed to enroll people at the point of contact.

Multi-program applications and one-stop shops. Where possible, application or renewal for one program should automatically enroll or re-enroll the applicant in others. When the enrollment process can’t be combined across programs, applicants to be able to register for multiple programs in one visit (or call, or online session).

Application autofill. Where data on an applicant’s personal information are available in an existing database, they should auto-populate in application and renewal forms.

Automatic or easy re-enrollment/recertification. When recipients are required to reapply for a program or provide information for recertification, this should be done automatically where possible — again drawing on administrative data. If that isn’t possible, the re-enrollment or recertification burden should be as minimal as possible.

Fewer options. Choice can be a good thing. But it also can be paralyzing. Applicants who are asked to choose from dozens of healthcare plans are less likely to complete the application process and to re-enroll. Reducing the options to a cognitively manageable number will tend to help.

Default options. Human frequently follow the path of least resistance. When enrollment is a simple matter of opting in or out, making “in” the default will increase program participation. Similarly, if participants must choose among various program options and one of the options is clearly best for a significant share of participants, making that option the default will improve outcomes.

CENTRALIZATION OR DECENTRALIZATION?

Subnational governments sometimes have considerable authority in rule setting, administration, and/or financing of public insurance. This authority can apply to the conditions for benefit eligibility, the implementation of those conditions (outreach efforts, ease of application), the benefit level, and the duration of benefit receipt.

Where subnational authority is greater, we would expect more inequality in public insurance provision across regions or localities, due to differences in affluence and in policy preferences.42 Massachusetts is much richer, and much more progressive, than Mississippi. That is indeed what we observe. Sarah Bruch, Marcia Meyers, and Janet Gornick examined 10 American safety net programs that differ in the degree to which subnational governments have authority over rule setting, administration, and/or financing. They found that policies with more state government authority tend to vary more across the states: “The weaker the federal role, the further apart are the states with respect to both the share of the needy they help and the level of assistance they provide.”43

Is decentralization bad for the poor? Not necessarily. For instance, if rule making is centralized and national policy makers worry that a generous benefit level will create problematic incentives in low-income regions, they may set the benefit at a level that is too low for recipients who live in richer, more expensive locations. In this situation, it might be better for the poor to have a national floor with local governments allowed to go higher than the floor rather than to have a uniform policy. Also, allowing subnational governments to experiment with different strategies may lead to helpful policy learning, with local governments able to borrow the most successful approaches.

The conventional view, though, is that decentralization will produce a race to the bottom in public insurance benefits. To avoid encouraging in-migration of low-income individuals and households, or to permit lower tax rates, richer areas will reduce benefit access, benefit levels, or benefit duration to match less affluent areas.44 That will tend to be bad for the poor.

The US experience offers mixed evidence. Consider first the main cash social assistance program: AFDC-TANF. The 1996 welfare reform significantly increased states’ authority over rule setting and administration, and this is widely thought to have caused a subsequent reduction in benefit generosity and accessibility. However, benefit levels for this program began declining around 1970, and while they continued to fall after the 1996 reform, there is no indication of an acceleration in the decline, as we see in figure 8. On the other hand, figure 9 shows that access to the benefit did begin to decrease in the mid-1990s, and this was a shift from the prior pattern. Then again, the reduction in access to cash social assistance may have been mainly a product of the new time limits imposed on recipients, and this change came from the federal government rather than from state governments.

Figure 8. AFDC-TANF benefit level
Average yearly benefit per recipient family. Inflation adjustment is via the CPI-U-RS. “k” = thousand. Data source: for pre-2000, Social Security Administration; for 2000ff, US Department of Health and Human Services, Office of Family Assistance, “Characteristics and Financial Circumstances of TANF Recipients.”

Figure 9. AFDC-TANF recipients
Share of the population. Data source: US Department of Health and Human Services, Office of Family Assistance, “AFDC Caseload Data” and “TANF Caseload Data.”

Next, consider the statutory minimum wage — not technically a public insurance program, but one of the key government policies aimed at achieving economic security and shared prosperity. As we see in figure 10, the federal government increased the minimum wage steadily from its inception in the late 1930s until the late 1960s. That continued in the 1970s, though higher-than-expected inflation rates during that decade nullified those increases. Since 1980 the federal government has boosted the minimum wage only a few times, and its inflation-adjusted value hasn’t risen at all.

In the late 1990s, however, states and a few cities began enacting statutory minimum wages above the level of the federal minimum, sometimes also indexing their minimum wage to prices or increasing it regularly. As a result, the average actual (federal-state-local) minimum wage across the country has risen, and since 2014 the rise has been quite sharp. By 2019 the actual minimum wage was much higher than the federal minimum.

Figure 10. Statutory minimum wage
Dollars per hour. 2019 dollars, with inflation adjustment via the CPI-U-RS. Federal only: minimum wage set by the federal government. Federal, state, local: population-weighted average for the country, taking into account federal, state, and local minimum wages. Data source: Ernie Tedeschi, “Americans Are Seeing the Highest Minimum Wage in History (Without Federal Help),” New York Times, 2019.

This suggests that the ability of state and city governments to set their own minimum wage yielded a significantly higher minimum than would have obtained with a more centralized policy. It’s conceivable that this state and local freedom was itself a key reason why the federal minimum didn’t increase more — that national policy makers chose not to raise the minimum wage because they expected state and city policy makers to do so. But the pattern in the 1980s and 1990s suggests grounds for skepticism about that hypothetical counterfactual; though there were no separate subnational minimum wages during those decades, the federal minimum wasn’t increased.

Further evidence comes from cross-country comparison. Among the rich democratic nations, the Nordic countries have some of the most expansive and generous public insurance programs. Yet many of these programs have a national framework law that provides guidance and sets minimum standards coupled with extensive autonomy for local governments.45 And subnational governments’ share of total government expenditures is larger in Denmark and Sweden than in the United States.46

We need more research on the impact of centralization and decentralization of public insurance. At this point we can conclude that decentralization tends to produce more geographic inequality. When it comes to benefit generosity, decentralization may result in less, no difference, or even more.

ARE PUBLIC SERVICES PRO-POOR?

Governments in affluent nations provide or subsidize a host of services and public goods.47 Here’s a partial list:

  • Physical safety: policing, military
  • Assurance of basic liberties: freedom of thought, speech, political participation, religious practice
  • Money
  • Enforcement of property rights and contracts
  • Financial safeguards: limited liability for passive investors, bankruptcy, bank deposit insurance, protection against unauthorized use of credit cards
  • Clean air and water
  • Street cleaning, removal and disposal of sewage and garbage
  • Housing
  • Health care
  • Disability services
  • Elderly services
  • Workplace safety
  • Consumer safety
  • Disaster prevention and relief: firefighting, levies, cleanup, compensation to uninsured victims
  • Schooling: early education, K-12, university
  • Child care
  • Job training
  • Job search and placement assistance
  • Antidiscrimination enforcement
  • Public transportation
  • Facilitation of private transportation: roads, bridges, stoplights, enforcement of speed limits, air traffic control
  • Public spaces: sidewalks, museums, parks, sports fields, forests, campgrounds, beaches, oceans, lakes, swimming pools, zoos
  • Communication, information, and entertainment: support for phone lines, broadband, the Internet, public television and radio programming, subsidization of free private TV and radio networks, libraries, festivals
  • Free time: work hours regulations, statutory holidays, mandated vacations, mandated paid parental or family leave

Public services help the poor in two ways. First, they boost living standards directly. Governments subsidize or provide a wide array of services and public goods so that the cost to consumers is small or nil. Second, government services boost the earnings of those at the low end by enhancing human capital, assisting with job search and placement, and facilitating work-family balance.

When governments provide or subsidize public goods and services, they expand the sphere of consumption for which the cost is zero or minimal. This lifts the living standards of the least well-off, and it frees up their limited income for use in purchasing other goods and services.

On one view, however, public services are a highly ineffective way to help the poor, because they are just as widely used by the middle class and the affluent. It turns out, though, that this seemingly sensible intuition is wrong. Here’s why.

For any given type of government service, consumption may be progressive, equal, or regressive. That is, the service or public good may be used more by poor households than by affluent ones, about the same by each, or more by the affluent than by the poor. We have no precise measures of the distribution of service consumption, but estimates suggest that it tends to be similar across the income scale or slightly progressive.48 Let’s assume, perhaps conservatively, that the distribution is equal rather than progressive.

Services can be thought of as akin to a cash transfer. If a person receives government-funded health care worth $10,000, it is as though she has been given a $10,000 cash transfer that she then uses to pay for those health services. The same holds for schooling, roads, policing, and virtually every other type of public service. If the rich, the middle class, and the poor each consume roughly the same total dollars or euros or kroner worth of public services, it is equivalent to the government providing a large flat-rate (equal number of dollars or euros) cash transfer to all households.

In a society in which the market distribution of income is unequal, a flat-rate benefit — one that goes in equal amount to all citizens — is redistributive. It boosts the consumption, and hence the living standards, of the poor more than it does for the rich. If my market income is $100,000 and I receive public services worth $20,000, my consumption has increased by 20%. If my market income is only $10,000 and I receive government services worth $20,000, my consumption is boosted by 200%.

We also need to consider the financing of public services. If the tax system that funds government services is regressive, the provision of services may fail to redistribute. In fact, most rich countries have a tax system that is roughly proportional; people in low-income, middle-income, and high-income households each pay a similar share of their market income in taxes, so the effective tax rate is approximately the same for each group.49 But because the rich get so much of the market income, they pay a much larger share of the tax dollars (or euros or kroner or pounds) than the poor.

Services that are financed proportionally and consumed equally are redistributive. Figure 11 illustrates this. The tax payment data are estimates for the United States. When all types of taxes are taken into account — income, payroll, consumption, and others — the US tax system is proportional; each income group pays approximately the same share of its market income in taxes.50 But because the market distribution of income is quite unequal, those with higher incomes pay much more in dollars. The distribution of public service consumption shown in the chart is hypothetical. It is assumed to be equal across the income scale. In this illustration, households in the bottom income fifth pay about 3% of the taxes and consume about 20% of the government services and public goods.

Figure 11. Distribution of tax payments and public services
These shares are hypothetical. They assume all households pay the same effective tax rate (proportional tax system). And they assume all households receive or use the same quantity (dollar value) of public services.

How large is the redistributive impact of public services? One way to think about this is in relation to government transfers. Estimates by the OECD suggest that services reduce income inequality by only one-quarter to one-half as much as transfers do, depending on the measure used.51 However, this type of estimate includes only expenditures on health, education, and other public “social” services. It leaves out government spending on safety, infrastructure, public spaces, provision of free time (via holidays, paid parental leave, and regulation of work hours), and some of the other public goods and services listed above. If these were included, the estimated redistributive value would be larger.

The second way public services boost the living standards of the poor is by helping them into employment. Here we tend to think mainly of the K-12 school system, but governments do far more than this. The contribution includes early education, health care, job training, job placement assistance, special services for the disabled, language assistance for immigrants, targeted programs for the young and the elderly, assistance with transportation, and provision of temporary employment when few or no private-sector jobs are available.

All rich countries provide services in each of these areas, and in terms of expenditures there is considerable similarity in the two biggest areas — health care and education. The largest difference is in services other than health care and education.52 The Nordic countries in particular stand apart from other rich nations. Since the mid-1960s, Sweden, Denmark, and Norway, and later Finland, have put in place and steadily expanded an array of services that enhance the capabilities of people who grow up in relatively poor households and help them balance employment with family commitments throughout the life course. At the center of this is paid parental leave and government-funded early education. Parents typically are able to take a paid leave during a child’s first year. They can then put the child in high-quality low-cost early education centers after the first year and up to kindergarten. This facilitates employment for parents, especially mothers, and it boosts the cognitive and noncognitive skills of children from disadvantaged homes.53 After finishing formal schooling, young, middle-aged, and older adults can take advantage of various supports collectively referred to as “active labor market programs” — from specialized training to job placement to assistance with geographical relocation, among others.

The value of public services in boosting the living standards of the poor is difficult to measure, so we tend to overlook it. We shouldn’t.

SUMMARY

Public insurance programs boost the incomes of the least well-off and improve their material well-being. If such programs are too generous, this benefit could be offset by reduced employment or economic growth, but the comparative evidence suggests that the world’s rich nations haven’t reached or exceeded the tipping point.

Spending lots of money on social protection is not in and of itself helpful to the poor. Total social expenditures in the United States are greater than in Denmark and Sweden, because the US has a large private welfare state. But relatively little of America’s private social spending reaches the poor.

Universalism in social policy can be beneficial for poverty reduction, but it is by no means necessary. Countries that make heavier use of targeting have tended to be as successful at income redistribution as those with less targeting.

We know less than is often thought about the impact of centralization versus decentralization of public insurance. Decentralization almost certainly tends to produce more geographic inequality. But its effect on benefit generosity may be good, bad, or neither.

Public services are an important antipoverty tool. Their benefit doesn’t show up in income data, but they appear to play a key role in reducing material hardship. Services expand the sphere of consumption for which the cost is zero or minimal. And they help to boost the earnings and capabilities of the poor by enhancing human capital, assisting with job search and placement, and facilitating work-family balance.

  1. Michael J. Graetz and Jerry L. Mashaw, True Security: Rethinking American Social Insurance, Yale University Press, 1999; Nicholas Barr, The Welfare State as Piggy Bank, Oxford University Press, 2001; David A. Moss, When All Else Fails: Government as the Ultimate Risk Manager, Harvard University Press, 2002; John Quiggin, “The Risk Society: Social Democracy in an Uncertain World,” Centre for Policy Development, 2007; Lane Kenworthy, “Social Policy,” The Good Society; Kenworthy, “Social Democratic Capitalism,” The Good Society. ↩︎
  2. Hilary W. Hoynes, Marianne E. Page, and Ann Huff Stevens, “Poverty in America: Trends and Explanations,” Journal of Economic Perspectives, 2006; Lane Kenworthy, Progress for the Poor, Oxford University Press, 2011; Yonaton Ben-Shalom, Robert A. Moffitt, and John Karl Scholz, “An Assessment of the Effectiveness of Anti-Poverty Programs in the United States,” in The Oxford Handbook of the Economics of Poverty, edited by Philip N. Jefferson, Oxford University Press, 2012; Robert Haveman, Rebecca Blank, Robert Moffitt, Timothy Smeeding, and Geoffrey Wallace, “The War on Poverty: Measurement, Trends, and Policy,” Journal of Policy Analysis and Management, 2015, figures 4 and 5; Christopher Wimer, Zachary Parolin, Liana Fox, Anny Fenton, and Christopher Jencks, “The Direct Effect of Taxes and Transfers on Changes in the U.S. Income Distribution, 1967-2015,” Demography, 2020; Zachary J. Parolin and Janet C. Gornick, “Pathways toward Inclusive Income Growth: A Comparative Decomposition of National Growth Profiles,” American Sociological Review, 2021; Zachary Parolin, Matthew Desmond, and Christopher Wimer, “Inequality Below the Poverty Line since 1967: The Role of the U.S. Welfare State,” American Sociological Review, 2023; Sarah Marchal and Ive Marx, Zero Poverty Society, Oxford University Press, 2024. ↩︎
  3. Arthur M. Okun, Equality and Efficiency: The Big Tradeoff, Brookings Institution, 1975; Milton Friedman and Rose Friedman, Free to Choose, Harcourt Brace Jovanovich, 1979; Charles Murray, Losing Ground: American Social Policy, 1950-1980, Basic Books, 1984; Vito Tanzi, Governments versus Markets, Cambridge University Press, 2011. ↩︎
  4. Kathryn Edin and Laura Lein, Making Ends Meet, Russell Sage Foundation, 1997; Jason DeParle, American Dream, Penguin 2004; Diane Whitmore Schanzenbach, “Can Benefits and Incentives Promote Work?,” Journal of Policy Analysis and Management, 2018. ↩︎
  5. For earlier assessments, see Walter Korpi, “Economic Growth and the Welfare State: Leaky Bucket or Irrigation System?,” European Sociological Review, 1985; Ian Gough, “Social Welfare and Competitiveness,” New Political Economy, 1996; Anthony B. Atkinson, The Economic Consequences of Rolling Back the Welfare State, MIT Press, 1999; Lane Kenworthy, Egalitarian Capitalism, Russell Sage Foundation, 2004, ch. 6; Peter Lindert, Growing Public: Social Spending and Economic Growth since the Eighteenth Century, volume 2, Cambridge University Press, 2004; Lane Kenworthy, Jobs with Equality, Oxford University Press, 2008, ch. 7. ↩︎
  6. Jonas Agell, “Why Sweden’s Welfare State Needed Reform,” Economic Journal, 1996, p. 1767; Jelle Visser and Anton Hemerijck, A Dutch Miracle, Amsterdam University Press, 1997; Mats Benner and Torben Bundgaard Vad, “Sweden and Denmark: Defending the Welfare State,” in Welfare and Work in the Open Economy, volume 2, edited by Fritz W. Scharpf and Vivien A. Schmidt, Oxford University Press, 2000; Anders Bjorklund, “Going Different Ways: Labour Market Policy in Denmark and Sweden,” in Why Deregulate Labour Markets?, edited by Gøsta Esping-Andersen and Marino Regini, Oxford University Press, 2000; Jørgen Goul Andersen, “Denmark: From the Edge of the Abyss to a Sustainable Welfare State,” in Europe’s New State of Welfare, edited by Jørgen Goul Andersen, Jochen Clasen, Wim van Oorschot, and Knut Halvorsen, Policy Press, 2002; Gordon B. Dahl and Anne C. Gielen, “Intergenerational Spillovers in Disability Insurance,” Working Paper 24296, National Bureau of Economic Research, 2018. ↩︎
  7. Janet C. Gornick and Marcia K. Meyers, Families That Work: Policies for Reconciling Parenthood and Employment, Russell Sage Foundation, 2003; Jingjing Huo, Moira Nelson, and John Stephens, “Decommodification and Activation in Social Democratic Policy: Resolving the Paradox,” Journal of European Social Policy, 2008; Kenworthy, Jobs with Equality; Gøsta Esping-Andersen and John Myles, “Economic Inequality and the Welfare State,” in The Oxford Handbook of Economic Inequality, edited by Wiemer Salverda, Brian Nolan, and Timothy M. Smeeding, Oxford University Press, 2009; Lane Kenworthy, “Labor Market Activation,” in The Oxford Handbook of the Welfare State, edited by Francis G. Castles, Stephan Leibfried, Jane Lewis, Herbert Obinger, and Christopher Pierson, Oxford University Press, 2010; Jonas Pontusson, “Once Again a Model: Nordic Social Democracy in a Globalized World,” in Futures of the Left, edited by James Cronin, George Ross, and James Shoch, Duke University Press, 2011; Anton Hemerijck, Changing Welfare States, Oxford University Press, 2012; Henrik Jacobsen Kleven, “How Can Scandinavians Tax So Much?,” Journal of Economic Perspectives, 2014. ↩︎
  8. Moss, When All Else Fails; Gareth Olds, “Entrepreneurship and Public Health Insurance,” 2014; David Sraer, David Thesmar, Antoinette Schoar, and Johan Hombert, “Can Unemployment Insurance Spur Entrepreneurial Activity?,” Working Paper 20717, National Bureau of Economic Research, 2014. ↩︎
  9. 1979 and 2019 are helpful beginning and ending years because both were business-cycle peaks. ↩︎
  10. Government spending isn’t the only way to measure the generosity of public insurance. Another option is to focus on program structures rather than expenditures. See Gøsta Esping-Andersen, The Three Worlds of Welfare Capitalism, Princeton University Press, 1990; Lyle Scruggs, Detlef Jahn, and Kati Kuitto, “Comparative Welfare Entitlements Dataset 2,” version 2014-03. Using this type of measure yields patterns very similar to what we see in figures 1 and 2. ↩︎
  11. For more, see Peter H. Lindert, Making Social Spending Work, Cambridge University Press, 2021. ↩︎
  12. Kenworthy, “Social Democratic Capitalism.” ↩︎
  13. Lane Kenworthy, “Employment,” The Good Society. ↩︎
  14. For more, see Marchal and Marx, Zero Poverty Society. ↩︎
  15. The preferred test for causality when using country-level data is to compare changes (rather than levels) across countries. This quasi-experimental (“difference-in-differences”) approach gives us greater confidence that a correlation doesn’t owe to an alternative, difficult-to-measure cause such as culture. That won’t work for analyzing the effects of social policy, however, because there has been no noteworthy change in social policy transfers during this period. The amount spent on social programs has increased, but the rise has come almost entirely in the form of increased spending on services — mainly healthcare and family-friendly programs such as preschool and childcare. (See Kenworthy, “Social Policy.”) These won’t show up in household incomes, and so we wouldn’t expect them to influence relative poverty rates or p10 household incomes. ↩︎
  16. Kenworthy, Progress for the Poor, ch. 2; Kenworthy, “A Decent and Rising Income Floor,” The Good Society. ↩︎
  17. Kenworthy, “A Decent and Rising Income Floor.” ↩︎
  18. “Full Transcript of the Romney Secret Video,” Mother Jones, September 2012. ↩︎
  19. Nicholas Eberstadt, A Nation of Takers: America’s Entitlement Epidemic, Templeton Press, 2012. See also Charles Murray, Losing Ground; Murray, Coming Apart: The State of White America, 1960-2010, Crown Forum, 2012. ↩︎
  20. Council of Economics Advisors, “The War on Poverty 50 Years Later: A Progress Report,” 2014, p. 28, using data from the IRS and the National Longitudinal Study of Youth; Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin. ↩︎
  21. Lane Kenworthy, “Life in the Good Society,” The Good Society; Kenworthy, “Social Democratic Capitalism.” ↩︎
  22. Willem Adema, “What Do Countries Really Spend on Social Policies? A Comparative Note,” OECD Economic Studies, 1997; Christopher Howard, The Hidden Welfare State, Princeton University Press, 1997; Willem Adema, “Revisiting Real Social Spending Across Countries: A Brief Note,” OECD Economic Studies, 2001; Jacob S. Hacker, The Divided Welfare State, Cambridge University Press, 2002; Christopher Howard, The Welfare State Nobody Knows, Princeton University Press, 2007; Willem Adema and Maxime Ladaique, “How Expensive is the Welfare State? Gross and Net Indicators in the OECD Social Expenditure Database (SOCX),” OECD Social, Employment, and Migration Working Paper 92, 2009; Price V. Fishback, “Social Welfare Expenditures in the United States and the Nordic Countries: 1900-2003,” Working Paper 15982, National Bureau of Economic Research, 2010; Irwin Garfinkel, Lee Rainwater, and Timothy Smeeding, Wealth and Welfare States, Oxford University Press, 2010; Neil Gilbert, “Comparative Analyses of Stateness and State Action: What Can We Learn from Patterns of Expenditure?,” in United in Diversity? Comparing Social Models in Europe and America, edited by Jens Alber and Neil Gilbert, Oxford University Press, 2010; Suzanne Mettler, The Submerged State, University of Chicago Press, 2011; Kenworthy, “Social Policy.” Another reason total social expenditures in the United States are higher is that Denmark and Sweden tax back a larger portion of public transfers. Public transfer programs in Denmark and Sweden tend to be “universal” in design: a large share of the population is eligible for the benefit. While this boosts public support, it makes the programs very expensive. To make them more affordable, the government claws back some of the benefit by taxing it as though it were regular income. All countries do this, including the United States, but the Nordic countries do it more extensively. Does that hurt their poor? Not much. The tax rates increase with household income, so much of the tax clawback hits middle- and upper-income households. ↩︎
  23. Kenworthy, Progress for the Poor, ch. 9; Kimberly J. Morgan, “America’s Misguided Approach to Social Welfare: How the Country Could Get More for Less,” Foreign Affairs, 2013. ↩︎
  24. They also tend to cost more, due to higher administrative costs and management fees. See Graetz and Mashaw, True Security; Steven Attewell, “Competing Visions of the Past: Learning from History for the Future of American Social Policy,” New America Foundation, 2012. ↩︎
  25. Graetz and Mashaw, True Security; Anne Kim, Adam Solomon, Bernard L. Schwartz, Jim Kessler, and Stephen Rose, “The New Rules Economy: A Policy Framework for the 21st Century,” ThirdWay, 2007. ↩︎
  26. This section draws from Kenworthy, Progress for the Poor, ch. 6. ↩︎
  27. Rebecca M. Blank, It Takes a Nation: A New Agenda for Fighting Poverty, Russell Sage Foundation and Princeton University Press, 1997, ch. 6; Neil Gilbert, Transformation of the Welfare State: The Silent Surrender of Public Responsibility, Oxford University Press, 2002, ch. 5; Peter H. Schuck and Richard J. Zeckhauser, Targeting in Social Programs, Brookings Institution, 2006. ↩︎
  28. Harold Wilensky, The Welfare State and Equality, University of California Press, 1975; Walter Korpi, “Approaches to the Study of Poverty in the United States: Critical Notes from a European Perspective,” in Poverty and Public Policy, edited by V.T. Covello, Schenkman, 1980; Lee Rainwater, “Stigma in Income-Tested Programs,” in Income-Tested Transfer Programs, edited by Irwin Garfinkel, Academic Press, 1982; Stein Ringen, The Possibility of Politics: A Study in the Political Economy of the Welfare State, Clarendon Press, 1987; Esping-Andersen, The Three Worlds of Welfare Capitalism; Theda Skocpol, “Targeting within Universalism: Politically Viable Policies to Combat Poverty in the United States,” in The Urban Underclass, edited by Christopher Jencks and Paul E. Peterson, Brookings Institution, 1991; Jonah B. Gelbach and Lant H. Pritchett, “Does More for the Poor Mean Less for the Poor?,” Working Paper 1523, Policy Research Department, Poverty and Human Resources Division, The World Bank, 1995; Korpi and Palme, “The Paradox of Redistribution”; Bo Rothstein, Just Institutions Matter: The Moral and Political Logic of the Universal Welfare State, Cambridge University Press, 1998; Karl Ove Moene and Michael Wallerstein, “Targeting and Political Support for Welfare Spending,” Economics of Governance, 2001; Wim van Oorschot, “Targeting Welfare: On the Functions and Dysfunctions of Means Testing in Social Policy,” in World Poverty, edited by Peter Townsend and David Gordon, The Policy Press, 2002; Jonas Pontusson, Inequality and Prosperity, Cornell University Press, 2005; Andrea Louise Campbell, “Universalism, Targeting, and Participation,” in Remaking America: Democracy and Public Policy in an Age of Inequality, edited by Joe Soss, Jacob S. Hacker, and Suzanne Mettler, Russell Sage Foundation, 2007; Christian Albrekt Larsen, “The Institutional Logic of Welfare Attitudes: How Welfare Regimes Influence Public Support,” Comparative Political Studies, 2008. ↩︎
  29. Korpi and Palme, “The Paradox of Redistribution”; Hwanjoon Kim, “Anti-Poverty Effectiveness of Taxes and Income Transfers in Welfare States,” International Social Security Review, 2000; Pontusson, Inequality and Prosperity. ↩︎
  30. Korpi and Palme, “The Paradox of Redistribution,” p. 663. ↩︎
  31. Korpi and Palme, “The Paradox of Redistribution,” p. 677. ↩︎
  32. Kenworthy, Progress for the Poor, ch. 6; Ive Marx, Lina Salanauskaite, and Gerlinde Verbist, “The Paradox of Redistribution Revisited,” Discussion Paper 7414, Institute for the Study of Labor, 2013. ↩︎
  33. Counting public pensions in a measure of targeting-universalism or redistribution may be misleading. In retirement many people have no income from employment, so the pension they receive appears in the calculations as though it is going to a very poor household. But this is an illusion, as pension programs in effect are forced saving; the government requires employed citizens to put money away during their working years and then returns it to them (with interest) in their retirement years. The measures therefore, according to this view, overstate the degree of targeting and the degree of redistribution achieved by transfers. Peter Whiteford has some calculations of targeting-universalism and redistribution that address this concern. He uses households’ position on the income ladder after transfers are added and taxes subtracted, rather than before. If a retired couple’s income consists solely of a public pension payment, they will be at the very bottom of the ladder. In Whiteford’s calculations they instead might be at the twentieth percentile or even higher, depending on how large their pension check is. According to Whiteford’s data, as of the mid-2000s the degree of universalism correlates negatively with redistribution; nations that score higher on universalism tend to score lower on redistribution. This suggests additional reason to rethink the notion that targeting is an impediment to effective redistribution. See Peter Whiteford, “How Much Redistribution Do Governments Achieve? The Role of Cash Transfers and Household Taxes,” ch. 4 in Growing Unequal?, OECD, 2008; Whiteford, “Transfer Issues and Directions for Reform: Australian Transfer Policy in Comparative Perspective,” Social Policy Research Center, University of New South Wales, 2009. ↩︎
  34. To measure the size of the redistributive budget I use government social expenditures as a share of GDP, adjusted for the size of the elderly population and the unemployment rate. This is similar to the measure used by Korpi and Palme (“The Paradox of Redistribution,” table 3). ↩︎
  35. Robert Greenstein, “Universal and Targeted Approaches to Relieving Poverty: An Alternative View,” in The Urban Underclass, edited by Christopher Jencks and Paul E. Peterson, Brookings Institution, 1991; Paul Pierson, Dismantling the Welfare State? Reagan, Thatcher, and the Politics of Retrenchment, Cambridge University Press, 1994; Howard, The Welfare State Nobody Knows, p. 106; Robert Greenstein, “Targeting vs. Universalism, and Other Factors That Affect Social Programs’ Political Strength and Durability,” expanded edition, Hamilton Project, 2022; Lane Kenworthy, “Social Programs,” The Good Society. ↩︎
  36. Kenneth Nelson, “Universalism versus Targeting: The Vulnerability of Social Insurance and Means-Tested Minimum Income Protection in 18 Countries, 1990-2002,” International Social Security Review, 2007, figure 1; Kenworthy, Progress for the Poor, ch. 6. Nelson, in a comparative analysis of eighteen rich countries, finds little difference between the trajectories of means-tested benefits (mainly social assistance) and social insurance benefits (old-age pensions, unemployment insurance, and sickness insurance) during the 1990s and early 2000s ↩︎
  37. A softer version of the universalism-is-better-for-redistribution hypothesis says that once a country creates large universal public insurance programs, it can then shift toward greater targeting while still maintaining redistributive generosity, because it will have conveyed to its middle class a sense that the country’s welfare state mainly serves to provide insurance against risk rather than to redistribute money from rich to poor. Unfortunately, this is difficult to test. The problem is that there are other factors apart from the structure of social programs — union strength, left party influence, government structure, public opinion, and perhaps others — that might account for why Denmark has been able to make greater use of targeting without experiencing a shrinking of its welfare state and the US has become more universalistic without a noteworthy increase in the size of its redistributive budget. ↩︎
  38. van Oorschot, “Targeting Welfare”; M. Matsaganis et al, “Child Poverty and Family Transfers in Southern Europe,” Euromod Working Paper EM2-04, 2004; Chris de Neubourg, Julie Castonguay, and Keetie Roelen, “Social Safety Nets and Targeted Social Assistance: Lessons from the European Experience,” SP Discussion Paper 0718, Social Protection and Labor, The World Bank, 2007; Bo Rothstein, “Corruption, Happiness, Social Trust, and the Welfare State,” Social Research, 2010. ↩︎
  39. Pamela Herd and Donald P. Moynihan, Administrative Burden: Policymaking by Other Means, Russell Sage Foundation, 2018, pp. 6-7; Greenstein, “Targeting vs. Universalism,” pp. 21-29. ↩︎
  40. Cass R. Sunstein, Simpler: the Future of Government, Simon and Schuster, 2013; Herd and Moynihan, Administrative Burden. ↩︎
  41. Herd and Moynihan, Administrative Burden, p. 171. ↩︎
  42. Aaron Wildavsky, “Federalism Means Inequality,” Society, 1985; Robin Broadway and Anwar Shah, Fiscal Federalism: Principles and Practice of Multiorder Governance, Cambridge University Press, 2011. ↩︎
  43. Sarah K. Bruch, Marcia K. Meyers, and Janet C. Gornick, “The Consequences of Decentralization: Inequality in Safety Net Provision in the Post–Welfare Reform Era,” Social Service Review, 2018. In contrast, a study of changes in centralization of social assistance in the Nordic countries in the 1990s and 2000s found little or no effect on inequality of benefit generosity or provision. However, this may have been because the changes were relatively small compared to the variation across the US states. See Renate Minas, Vibeke Jakobsen, Timo Kauppinen, Tomas Korpi, and Thomas Lorentzen, “The Governance of Poverty: Welfare Reform, Activation Policies, and Social Assistance Benefits and Caseloads in Nordic Countries,” Journal of European Social Policy, 2018. ↩︎
  44. Wallace E. Oates, Fiscal Federalism, Harcourt Brace Jovanovich, 1972; Sanford F. Schram and Joe Soss, “Making Something Out of Nothing: Welfare Reform and a New Race to the Bottom,” Publius, 1998; Craig Volden, “The Politics of Competitive Federalism: A Race to the Bottom in Welfare Benefits?,” American Journal of Political Science, 2002. ↩︎
  45. Renate Minas and Einar Overbye, “The Territorial Organization of European Social Assistance Schemes,” in Rescaling of Social Welfare Policies, edited by Yuri Kazepov, 2010. ↩︎
  46. OECD, OECD Regions and Cities at a Glance. ↩︎
  47. This section draws from Kenworthy, Progress for the Poor, ch. 7. ↩︎
  48. OECD, Growing Unequal?, 2008, ch. 9; Garfinkel, Rainwater, and Smeeding, Wealth and Welfare States, table 4.1; Alari Paulus, Holly Sutherland, and Panos Tsakloglou, “The Distributional Impact of In-Kind Public Benefits in European Countries,” Journal of Policy Analysis and Management, 2010. ↩︎
  49. Lane Kenworthy, “Taxes,” The Good Society. ↩︎
  50. Kenworthy, “Taxes.” ↩︎
  51. OECD, Growing Unequal?, ch. 9. ↩︎
  52. OECD, Growing Unequal?, figure 9.4; Garfinkel, Rainwater, and Smeeding, Wealth and Welfare States. ↩︎
  53. Lane Kenworthy, “Early Education,” The Good Society. ↩︎