An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale

29 Pages Posted: 19 May 2009

See all articles by Martin Halla

Martin Halla

Johannes Kepler University Linz - Department of Economics; IZA Institute of Labor Economics

Mario Lackner

Johannes Kepler University Linz

Friedrich Schneider

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)

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Abstract

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 crowded out by adverse medium and long run effects.

Keywords: welfare state, social norms, benefit fraud, benefit morale

JEL Classification: A13, I30, I38, J65, J68, H20, Z13

Suggested Citation

Halla, Martin and Lackner, Mario and Schneider, Friedrich G., An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale. IZA Discussion Paper No. 4165, Available at SSRN: https://ssrn.com/abstract=1405933

Martin Halla (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Mario Lackner

Johannes Kepler University Linz ( email )

Altenbergerstr. 69
A-4040 Linz, Uper Austria 4040
Austria

Friedrich G. Schneider

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8210 (Phone)
+43 732 2468 8208 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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