Efficient and Inefficient Welfare States

47 Pages Posted: 24 Jan 2011

See all articles by Yann Algan

Yann Algan

Universite Paris I Pantheon-Sorbonne - CNRS-EUREQUA; IZA Institute of Labor Economics

Pierre Cahuc

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA); University of Angers - French National Center for Scientific Research (CNRS); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Marc Sangnier

Aix-Marseille University - Aix-Marseille School of Economics

Abstract

This paper shows that cross country differences in the generosity and the quality of the welfare state are associated with differences in the trustworthiness of their citizens. We show that generous, transparent and efficient welfare states in Scandinavian countries are based on the civicness of their citizens. In contrast, the generosity but low transparency of the Continental European welfare states survive thanks to the support of a large share of uncivic individuals who consider that it can be justifiable to misbehave with taxes and social benefits. We also explain why countries with an intermediate degree of trustworthiness of their citizens and of transparency of the government, like Anglo-Saxon countries, have small welfare states. Overall, this paper provides a rationale for the observed persistence of both efficient and inefficient welfare states, as a function of the civicness of the citizens.

Keywords: welfare state, trust, civism, corruption

JEL Classification: H1, Z1

Suggested Citation

Algan, Yann and Cahuc, Pierre and Sangnier, Marc, Efficient and Inefficient Welfare States. IZA Discussion Paper No. 5445. Available at SSRN: https://ssrn.com/abstract=1745720

Yann Algan (Contact Author)

Universite Paris I Pantheon-Sorbonne - CNRS-EUREQUA ( email )

106-112 Boulevard de l'Hopital
Paris Cedex 13, 75647
France

IZA Institute of Labor Economics

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

Pierre Cahuc

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA) ( email )

106-112 Boulevard de l'Hopital
Paris Cedex 13, 75647
France
+33 1 4117 3717 (Phone)
+33 1 4117 3724 (Fax)

HOME PAGE: http://eurequa.univ-paris1.fr/membres/cahuc/

University of Angers - French National Center for Scientific Research (CNRS)

106-112 Boulevard de l'Hopital
75647 Paris Cedex 13
France
+33 4 44 07 82 06 (Phone)
+33 4 44 07 82 02 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

Marc Sangnier

Aix-Marseille University - Aix-Marseille School of Economics ( email )

5-9 Boulevard Bourdet
Marseille, 13001
France

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