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.
Rasmus Landersø, James Heckman, 12 September 2016
Daniel Waldenström, 20 December 2015
Recent work on the importance of wealth and capital shows that it has fluctuated grossly over time in Europe. This column examines whether this pattern carries over to smaller, late-industrialising countries by looking at new historical evidence from Sweden. After being low in the pre-industrial era, Swedish wealth levels came into line with the rest of Europe in the 20th century. However, government wealth grew much faster and became more important in Sweden, largely due its public pension system. These findings highlight the role of economic and political institutions in the long-run evolution of national wealth.
Assaf Razin, Efraim Sadka, Benjarong Suwankiri, 17 January 2015
Allowing greater immigration may raise tax revenue and help pay for the welfare state, but it also affects the future composition of the voting population. This column discusses a political-economy model in which the largest group in a winning coalition chooses tax and immigration policies, and explains how the composition of the voting population changes over time.
Yann Algan, Pierre Cahuc, Marc Sangnier, 17 July 2014
It is commonly argued that the persistence of large welfare states in Scandinavian countries is due to the trustworthiness of their citizens. This column shows that the relationship between trust and the size of the welfare state is twin peaked. Untrustworthy individuals support generous welfare states because they expect to benefit without bearing the costs, whereas civic-minded individuals only support generous welfare states when surrounded by people they trust.
Christian Dustmann, Tommaso Frattini, 13 November 2013
The immigration debate has focused on immigrants’ net fiscal impact – whether they receive more in welfare payments and other benefits than they pay back in taxes. This column summarises research showing that – contrary to popular belief – immigrants who arrived in the UK since 2000 have contributed far more in taxes than they have received in benefits. Compared with natives of the same age, gender, and education level, recent immigrants are 21% less likely to receive benefits.
Yonatan Ben-Shalom, Robert Moffitt, John Karl Scholz, 27 June 2011
What is happening to the US welfare state? According to this column, and contrary to the views of many, the US welfare state has not been going through a significant retrenchment over the last two decades but has in fact been growing. However, it adds that there has been a shift in who benefits over that period, with several types of families left behind.
Loukas Karabarbounis, 16 October 2010
Why do Europe and the US, both affluent regions, differ so much in the size of their welfare state? To answer this question, this column examines OECD countries between 1975 and 2001, finding that countries with wealthier rich- and middle-classes are associated with a smaller welfare state while those with a richer poor class are associated with a larger one – supporting the “one dollar, one vote” explanation.
Jan van Ours, Bas van der Klaauw, 19 August 2010
Rising unemployment has forced policymakers to look for ways to get the unemployed back to work – to raise the “reemployment” rate of the unemployed. This column provides new evidence from the Netherlands suggesting that the stick of benefit sanctions is much more effective than the carrot of reemployment bonuses.
Thorvaldur Gylfason, Bengt Holmstrom, Sixten Korkman, Vesa Vihriälä, Hans Söderström, 10 February 2010
Is the Nordic model an asset or a liability? The global crisis has seen GDP in the region decline by between 4.5% and 7%. This column argues that the Nordic model, with its welfare state and high rate of investment in human capital, can, properly implemented, be part of the solution.
Gianmarco Ottaviano, Giovanni Peri, 17 April 2008
Immigration of less educated, younger Eastern Europeans and North Africans to Western Europe would economically benefit its educated and older population. This column, summarising research on immigration effects in Germany, suggests that, to fully reap the benefits from immigration, Western Europe should make its labour markets more competitive and accessible to outsiders (immigrants) and its welfare state more selective.
Hans-Werner Sinn, 19 June 2007
Germany needs a radical cultural and economic revolution, one as courageous as – but not identical to – the one that occurred in Britain under Margaret Thatcher. After 50 years of progressive entanglement, Germany is ripe for this.