An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale
Johannes Kepler University Linz - Department of Economics; Institute for the Study of Labor (IZA)
Johannes Kepler University Linz
Johannes Kepler University Linz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
Kyklos, Vol. 63, No. 1, pp. 55-74, February 2010
Does the supply of a welfare state create its own demand? Many economic scholars studying welfare arrangements refer to Say's law and insinuate a self-destructive welfare state. However, little is known about the empirical validity of these assumptions and hypotheses. We study the dynamic effect of different welfare arrangements on benefit fraud. In particular, we analyze the impact of the welfare state on the respective social norm, i.e. benefit morale. It turns out that a high level of public social expenditures and a high unemployment rate are associated with a small positive (or no) immediate impact on benefit morale, which however is (partly) crowded out by adverse medium and long run effects. In contrast to earlier studies we do not find that younger birth cohorts have lower values of benefit morale.
Number of Pages in PDF File: 20Accepted Paper Series
Date posted: January 18, 2010
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