Abstract

http://ssrn.com/abstract=336852
 
 

References (30)



 
 

Citations (7)



 


 



International Integration, Risk and the Welfare State


Torben M. Andersen


University of Aarhus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)


Scandinavian Journal of Economics, Vol. 104, pp. 343-364, 2002

Abstract:     
How does international integration affect the welfare state? Does it call for a leaner or an expanded welfare state? International integration may affect the distortions caused by welfare state activities but also the risks motivating social insurance mechanisms. This paper addresses these potentially counteracting effects in a fully specified intertemporal two-country stochastic endowment model, focusing on the implications when product market integration reduces trade frictions across national product markets. It is shown that lower trade frictions may increase the marginal costs of public funds, which gives an argument for reducing (steady-state) public consumption. However, tighter integration of product markets unambiguously leads to more variability in private consumption, and this gives a case for expanding the social insurance provided via state-contingent public sector activities (automatic stabilizers).

Number of Pages in PDF File: 22

Accepted Paper Series


Date posted: January 4, 2003  

Suggested Citation

Andersen, Torben M., International Integration, Risk and the Welfare State. Scandinavian Journal of Economics, Vol. 104, pp. 343-364, 2002. Available at SSRN: http://ssrn.com/abstract=336852

Contact Information

Torben M. Andersen (Contact Author)
University of Aarhus - Department of Economics ( email )
University Park
Building 322
DK-8000 Aarhus C
Denmark
+45 8 942 1609 (Phone)
+45 8 613 6334 (Fax)
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
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