Welfare state and social Europe

Christopher Busch, David Domeij, Fatih Guvenen, Rocío Madera, 16 October 2018

Workers experience income volatility over their lifetime due to changes in both individual and macroeconomic conditions. Using panel data from the US, Germany, and Sweden, this column analyses how the probability of income losses and gains changes systematically over the business cycle. Downside risk increases in recessions, while upside chance is reduced. However, tax and transfer programmes blunt some of the largest declines in incomes in recessions.

Joan Costa-i-Font, 04 October 2018

Many European countries are revisiting how best to finance long-term care, balancing financial sustainability and the economic welfare of households. Using examples of Spain and Scotland, this paper demonstrates that an expansion of public funding for long-term care has an effect on caregiving choices, household finances, and hospital care. Unconditional or cash subsidies may entail a ‘caregiving moral hazard’, but both cash and care subsidies can bring savings to the health system by reducing the frequency and intensity of hospitalisation. 

Hope Corman, Dhaval Dave, Nancy Reichman, 08 September 2018

The 1996 welfare reform in the US was a major policy shift that sought to reduce dependence of single parents on government benefits by promoting work, encouraging marriage, and reducing non-marital childbearing. This column describes how the reform led to a decline in illicit drug use among women at risk of relying on welfare, a decrease in female arrests for property crime, and smaller declines in voting for women exposed to the reform compared to several similar comparison groups. The findings offer evidence that limiting cash assistance and encouraging work can lead to reductions in socially undesirable behaviours and increases in prosocial community behaviours.

Alberto Alesina, Armando Miano, Stefanie Stantcheva, 31 July 2018

The debate on immigration is often based on misperceptions about the number and character of immigrants. The column uses data from surveys in six countries to show that such misperceptions are striking and widespread. The column also describes how an experiment in which people were encouraged think about their perception of immigrants made them more averse to redistribution in general, suggesting that the focus on immigration in the political debate – without correcting the misperceptions respondents have about immigrants – could have the unintended consequence of reducing support for redistribution.

Pierre Cahuc, Francis Kramarz, Sandra Nevoux, 16 July 2018

Short-time work programmes aim to preserve jobs at firms that are experiencing temporarily low revenues, for example during a recession. This column assesses how the short-time work programme implemented in France during the Great Recession affected employment. Results confirm that the programme saved jobs and increased hours worked, and that participating firms recovered faster than non-participating firms. 

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