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
Date Written: December 2001
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: Suggested Citation