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The Birth and Growth of the Social-Insurance State:
Explaining Old-Age and Medical Insurance Across Countries

FRB of Kansas City Working Paper No. 01-13

53 Pages Posted: 21 Mar 2002  

Richard Johnson

Federal Reserve Bank of Kansas City - Economic Research Department

David M. Cutler

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: December 2001

Abstract

We seek to explain why countries have adopted national Old-Age Insurance and Health Insurance programs. Theoretical work has posited several factors that could lead to this adoption: the strain from expanding capitalism; the need for political legitimacy; the desire to transfer to similar people; increased wealth; and the outcome of leviathan government. We relate the probability of a country's creating social insurance to proxies for each of these theories. We find weak evidence that the probability of adopting a system declines with increases in wealth and with greater ethnic heterogeneity. Still, none of the theories is very strongly related to system adoption. We conclude that social insurance can be politically expedient for many different reasons.

Keywords: Structure and Scope of Government, Government Expenditures and Health, Social Security and Public Pensions, Economics of the Elderly, Economic History

JEL Classification: H11, H51, H55, J14, N00

Suggested Citation

Johnson, Richard and Cutler, David M., The Birth and Growth of the Social-Insurance State: Explaining Old-Age and Medical Insurance Across Countries (December 2001). FRB of Kansas City Working Paper No. 01-13. Available at SSRN: https://ssrn.com/abstract=304168 or http://dx.doi.org/10.2139/ssrn.304168

Richard Johnson (Contact Author)

Federal Reserve Bank of Kansas City - Economic Research Department ( email )

David Cutler

Harvard University - Department of Economics ( email )

Littauer Center, Room 315A
Cambridge, MA 02138
United States
617-496-5216 (Phone)
617-495-8570 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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617-868-3900 (Phone)
617-868-2742 (Fax)

Harvard University - Harvard Kennedy School (HKS) ( email )

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Cambridge, MA 02138
United States

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