Welfare states and its history

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Welfare states and its history
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Peter Lindert

• Most of the historical data and the arguments are
  based on Peter Linderts Growing Public (Vol1 and
  2).
• Social spending and Economic Growth Since the
  eighteenth century
• Period (18th century onwards)
• Most of the focus OECD
• World Bank data
• Educational expenditure
• Birth rates

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Complex issue

• There is always political struggle between those
  who are likely to benefit from redistribution and
  those who would be taxed by it
• Welfare spending is complicated as government
  must help people and at the same time must give
  incentive people for not depending on the
  government
• Also keeping down budget is an important task

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Social spending before 1850
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Government welfare spending in developed and
developing countries
Nita Rudra (2002) Globalization and the decline
of the welfare states in Less-Developed
countries. Industrial organization. Vol 56(2).
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Social transfer in OECD countries
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Social transfer in OECD countries
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Important questions

• Why social spending is so late in the history?
• Why did no country spend even 3 percent of its
  national product to its redistributive programs?
• Why now one thirds of GDP is allotted for social
  spending?
• Will the developing countries follow the same
  route as the developed countries?

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Age distribution Share over 65 Share under 15
Income (real gdp)
Accumulated capital Nonhuman human
Electoral variables
Prior development
Social spending/GDP Public pensions Welfare and
unemployment Public health Public education
Macro economy
Other Religion Openness to trade Military spending
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How social spending emerged before World War II

• There was little spending before 20th century
  because the political voice was restricted
• The important role of political voice is shown in
  Britains high poor relief in 1782-1834 and its
  cut backs in 1834 and 1870
• Germany and the US were leaders in tax-based
  public schooling whereas Britain lagged behind.

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Contd..

• The great advance of social transfers since 1880
  is explained partly by political voice, partly by
  population aging, and partly by income growth
• Ethnic homogeneity have better welfare states

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of household heads having the right to vote (UK)
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Poor relief (welfare)

• Governments of Europe intervened to keep food
  affordable during famines
• But their price control and market integration
  decides food crisis in the long run
• In 1740 England passed a law for imprisonment of
  Rouges, vagabonds, idle and disorderly people

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Dutch and German view before 1850 on poor relief

• Dutch view The state must prohibit beggary. But
  the state can never alleviate poverty. As far as
  relief for poor is concerned the best institution
  is the church.
• German view Due to excessive charities of the
  church the number of poor greatly increased.
• 19th century Germans viewed that in France and
  England pauperism grown though the excessive
  almsgiving of the Church

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Reasons for denying relief to poor in great
Burstead, Essex, 1823-1828

• Failing to attend worship last Sunday (n17)
• Failing to provide an accurate report of family
  labor earnings, or known to earn too much for the
  relief they requested (16)
• Refusing to work for a local farmer (10)
• Keeping a dog as a pet (5)
• Using a doctor other than the one designated by
  the parish (5)

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Literacy and public spending
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Literacy during 1500-1800 (1)
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Literacy during 1500-1800 (2)
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Public spending on education, Total ( of GNP)
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Public spending on education, Total ( of GNP)
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Expenditure per student, primary( of GNP per
capita)
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Expenditure per student, secondary ( of GNP per
capita)
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Expenditure per student, tertiary( of GNP per
capita)
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Expenditure per student, tertiary( of GNP per
capita)
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Impact of population growth
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Elderly in the EU and US
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Ageing and economic burden in the EU

• The process of ageing is putting European social
  services under considerable stress
• Old age expenditure (as a of GDP) has risen
  significantly since the 1980s and remained stable
  during much of the 1990s
• Old age expenditure represents two fifths of all
  social expenditure (highest incidence in Italy,
  Greece, and Spain)

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Dependency problems

• Old age structures and young age structures both
  create problems with supporting dependents they
  are just different problems.
• Young age structure requires expanding labor
  markets, investments in education
• Investments in older people less likely to
  enhance productivity

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Population Pyramids 1998
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Age dependency ratio
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Migration and welfare
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Complex relation

• Though many industrialized countries talk about
  their looming pension crisis, US, Canada,
  Australia and New Zealand are spared relatively
  due to migration
• Many questions to ask in this area
• Are the fresh immigrants a net burden on native
  tax payers
• Can Italy solve pension crisis by admitting more
  young Albanians and France from West Africans
• Tax payers and immigrants schooling

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Immigration to USA 1850 to 2000
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(No Transcript)
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For all countries

• http//pwt.econ.upenn.edu/php_site/pwt61_form.php
• http//www.who.int/nutgrowthdb/database/en/
• http//www.fao.org/es/ess/index_en.asp
• http//www.ifpri.org/data/data_menu.asp

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China

• China government expenditure, growth, poverty,
  and infrastructure, 1952-2001. For information
  please visit http//www.ifpri.org/data/dataform.
  htm

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Ottoman Empire

• http//www.ottoman.uconn.edu/data.htm

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Presentation and Assignment

• Presentation dates
• Saturday and Sunday (July 29 and 30 ???)
• Assignment
• Deadline for the submission is August 7

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Thank You