Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 595: An Essay on Welfare State Dynamics

Assar Lindbeck ()
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Assar Lindbeck: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: The expansion of welfare-state arrangements is seen as the result of dynamic interaction between market behaviour and political behaviour, often with considerable time lags, sometimes generating either virtuous or vicious circles. Such interaction may also involve induced (endogenous) changes in social norms and political pre­ferences. Moreover, the internationalisation process not only limits the ability of national governments to redistribute income; they also increase the political demands for international mobility of welfare-state benefits and social services. I also discuss the dynamics of reforms and retreats of welfare-state arrangements.

Keywords: Welfare State; Welfare-State Dynamics; Political Equilibrium; Social Norms

JEL-codes: H10; H50

25 pages, May 15, 2003

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