Seminar Papers,
Stockholm University, Institute for International Economic Studies

Abstract: The paper discusses a number of threats to the financial sustainability of social spending: increased internationalization of national economies, gradually higher relative costs of producing a number of human services, the “graying” of the population, slower productivity growth in the private sector, low employment rates, and various types of disincentive effects related to the welfare state itself, including moral hazard. I argue that threats from gradually rising costs of providing human services and disincentive effects of welfare-state arrangements, in particular moral hazard and benefit dependency, are more difficult to deal with than the other threats. I also discuss the choice between ad hoc policy reforms and automatic adjustment mechanisms, delegated to administrative bodies, for dealing with these threats.

Keywords: Sustainable fiscal policy; Baumol’s disease; moral hazard; automatic adjustment mechanisms

JEL-codes: E62; H31; H53

37 pages, October 6, 2005

Full text files

FULLTEXT01  

Download statistics

• Stockholm University, Institute for International Economic Studies
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Hanna Christiansson ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-05 17:11:56.