The Redistributive Impact of Public and Private Social Expenditure

Leiden University, Department of Economics Research Memorandum No. 2008.04

23 Pages Posted: 16 Jul 2009  

Kees Goudswaard

Leiden Law School - Department of Economics

Koen Caminada

Leiden Law School - Department of Economics

Date Written: 2008

Abstract

Most analyses of social protection are focussed on public arrangements. However, social effort is not restricted to the public domain; all kinds of private arrangements can be substitutes to public programs. In fact, in several countries there has been a shift from public towards private social arrangements. OECD-data indicate that accounting for private social benefits has an equalising effect on levels of social effort across a number of countries. This suggests that public and private social expenditures are complementary to some extent. But their distributional effects differ. In all OECD countries, the social protection system causes a more equal distribution of incomes. Indeed, using cross-country data, we find a negative relationship between public social expenditures and income inequality and a positive relationship between public social expenditure and income redistribution. But we do not find a significant positive relationship between private social expenditures and income inequality or income redistribution. Consequently, changes in the public/private-mix in the provision of social protection may affect the redistributive impact of the welfare state.

Keywords: Social Protection, Private Social Expenditure, Income Distribution

JEL Classification: D3, H22, H55

Suggested Citation

Goudswaard, Kees and Caminada, Koen, The Redistributive Impact of Public and Private Social Expenditure (2008). Leiden University, Department of Economics Research Memorandum No. 2008.04. Available at SSRN: https://ssrn.com/abstract=1434861 or http://dx.doi.org/10.2139/ssrn.1434861

Kees Goudswaard

Leiden Law School - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

Koen Caminada (Contact Author)

Leiden Law School - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands
++31715277858 (Phone)

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/caminada.html

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