Ratio Working Papers
OECD recommends: A Consensus For or Against Welfare States? Evidence from a New Database
() and Margareta Dackehag
Abstract: We describe the policy consensus in the OECD publication
Economic Surveys, by constructing a database that contains both quotations
and a quantification of the perceived reform need for 23 OECD countries
around 1985, 1995 and 2005. Using the database, we examine whether or not
the policy recommendations given by the OECD require welfare state
cutbacks. We also examine how reform need correlates with social
expenditure and income inequality. The recommendations in OECD Economic
Surveys describe a policy consensus based on competition, work incentives,
monetary reform, fiscal discipline and labor market reform. Reforms in
these areas do not necessarily require welfare state cutbacks.
Quantitatively, we find a significant positive correlation between reform
need and social expenditure only for the mid 1990s, and no significant
correlations between reform need and inequality. We conclude that OECD
countries with large welfare states have managed to implement reforms
without substantial welfare state retrenchment. The policy recommendations
in Economic Surveys imply a restructuring of the welfare state but not
necessarily welfare state cutbacks.
Keywords: Welfare state; reform; OECD; (follow links to similar papers)
JEL-Codes: C82; D63; P11; (follow links to similar papers)
15 pages, November 30, 2010
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