Welfare state and social Europe

Orsetta Causa, Mikkel Hermansen, 23 March 2018

Growing wealth inequality has become a key concern for economists, and tackling it requires a deep understanding of how tax and transfer systems affect the income distribution. Using OECD data, this column argues that taxes and transfers are less effective at reducing inequality today than they were in the mid-1990s. This drop in effectiveness has largely been driven by declining cash transfers, with a smaller, more heterogeneous role for personal income taxes.

Camille Landais, Arash Nekoei, J Peter Nilsson, David Seim, Johannes Spinnewijn, 03 February 2018

Unemployment insurance is compulsory in almost all countries, with no choice for workers over the level of coverage. But why restrict choice if it can improve the targeting of individuals who value the insurance the most? This column uses evidence from Sweden to examine whether the issue of adverse selection justifies a universal mandate for unemployment insurance. Workers who purchased more generous unemployment insurance were more than twice as likely to be unemployed in the following year. A universal mandate combats such adverse selection, but forces workers to buy insurance even when insurance costs are higher than the value they assign to it.

Daniel Barczyk, Matthias Kredler, 28 January 2018

Ageing societies and the increase in female labour force participation are putting pressure on governments to take a more active role in caring for the elderly. Using European and US data, this column investigates the responses of families to long-term care policy. The results suggest that care arrangements are strongly influenced by policy, and highlight the importance of accounting for informal care when evaluating reform proposals.

Roel Beetsma, Ward Romp, Ron van Maurik, 13 November 2017

Population ageing means that many current pension regimes are unsustainable, but the timing of pension reform measures is a political as well as an economic decision. This column uses new data on OECD pension reforms since 1970 to show that their timing has not been driven by projected demographic developments or political change, but by the state of the economy at the time when reforms were legislated. Pension systems have expanded more frequently during booms, and have contracted during economic downturns.

Marta Auricchio, Emanuele Ciani, Alberto Dalmazzo, Guido de Blasio, 01 September 2017

The nature of the relationship between public and private employment is ambiguous, with studies showing that increased public employment can have both crowding-in and crowding-out effects on private employment. This column explores this relationship across Italian municipalities. It finds evidence of strong crowding-out effects across municipalities, which is partially explained by increased competition in the housing market.

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