Welfare state and social Europe

Rasmus Landersø, James Heckman, 12 September 2016

The Scandinavian model of social welfare is often contrasted favourably with the US model in terms of promoting social mobility across generations. This column investigates the accuracy of these claims, focusing on the case of Denmark. Denmark invests heavily in child development, but then undoes the beneficial effects by providing weak labour market incentives for its children to attend school compared to the US. This helps explain why the influence of family background on educational attainment is similar in the two countries.

John Helliwell, 06 September 2016

Discussions about inequality tend to focus on the distribution of income and wealth. This column argues for a shift in focus towards another source of inequality – subjective wellbeing. Wellbeing inequality has grown significantly for the world as a whole and in eight of the ten global regions. One way to address this inequality is to increase social trust.

James Banks, Carl Emmerson, Gemma Tetlow, 07 May 2016

Many countries are increasing the age at which people can start claiming state-funded pensions. One objection often raised is that such policies are unfair because some will be too unhealthy to remain in paid work. This column compares employment rates in England of older people today to those of earlier generations, and also to those of younger people today. These comparisons suggest that a significant minority of older people appear to be unable to work on the grounds of health alone. 

Matthias Doepke, Fabian Kindermann, 03 May 2016

Europe is in the midst of a major demographic crisis, with many countries facing ultra-low fertility rates. This column uses survey data from 19 European countries to show how low fertility can be traced to disagreement within couples about having babies. In low-fertility countries, it is usually the women who bear most of the burden of childbearing, and who veto having more babies. Fertility can be raised by policies that specifically lower cost to women of childcare, whereas general subsidies for childbearing are much less effective.

Sagiri agiri Kitao, 15 April 2016

Most countries with a generous pay-as-you-go social security system and ageing demographics will need to implement significant welfare reform, such as a major cut in benefits or a significant increase in distortionary taxation. Individuals’ uncertainty about when such a policy change will occur will cause precautionary saving and changes in factor prices, affecting aggregate welfare. This column uses evidence from Japan to show that delaying welfare reform will benefit the elderly, at a long-lasting cost to the young.

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