Working Paper Series
The Future of Welfare Services: How Worried Should We Be about Wagner, Baumol and Ageing?
Abstract: Welfare services are an important part of the Nordic
welfare states both financially and for welfare state redistribution.
Baumol’s cost disease, Wagner’s law, and population ageing are often said
to bring challenges for the future provision of welfare services. While
none of the three poses an immediate threat against the financial
sustainability of the welfare state, they have important implications for
distribution and for the political support for the welfare state. The
combination demographic change, a higher relative price of welfare services
and increasing demand for welfare services may force politicians to make a
difficult choice between increasing taxes, allowing people to top up
publicly financed services with additional private financing, or risk
eroding support for the welfare state.
Keywords: Welfare services; Redistribution; Baumol’s disease; Wagner’s law; Population aging; (follow links to similar papers)
JEL-Codes: H11; I38; J11; J18; (follow links to similar papers)
16 pages, February 12, 2016
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