Efficient and Inefficient Welfare States

48 Pages Posted: 9 Feb 2011

See all articles by Yann Algan

Yann Algan

Sciences Po

Pierre Cahuc

Ecole Polytechnique, Paris

Marc Sangnier

Aix-Marseille University - Aix-Marseille School of Economics

Date Written: February 2011

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: civism, corruption, trust, Welfare state

JEL Classification: H1, Z1

Suggested Citation

Algan, Yann and Cahuc, Pierre and Sangnier, Marc, Efficient and Inefficient Welfare States (February 2011). CEPR Discussion Paper No. DP8229. Available at SSRN: https://ssrn.com/abstract=1758438

Pierre Cahuc

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Marc Sangnier

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

5-9 Boulevard Bourdet
Marseille, 13001
France

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