Globalisation and Social Spending

32 Pages Posted: 31 Mar 2003

See all articles by Paul De Grauwe

Paul De Grauwe

CESifo (Center for Economic Studies and Ifo Institute for Economic Research); London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR)

Magdalena Polan

KU Leuven - Department of Economics

Date Written: March 2003

Abstract

We provide evidence indicating that countries with well-developed social security systems do not necessarily face a trade-off between social spending and competitiveness. On average, countries that spend a lot on social needs score well in the competitiveness league. We investigate the importance of a reverse causality from competitiveness to social spending, and find that this is weak. We also present some possible explanations for our empirical finding. Finally, we interpret our findings in the framework of a theoretical model in which risk affects the size of the social sector and in which social spending affects the production function of the private sector.

Keywords: Economic Integration, Globalisation, Terms-of-trade Variability, International Trade

JEL Classification: F02, F10, F15

Suggested Citation

De Grauwe, Paul and De Grauwe, Paul and Polan, Magdalena, Globalisation and Social Spending (March 2003). Available at SSRN: https://ssrn.com/abstract=386765 or http://dx.doi.org/10.2139/ssrn.386765

Paul De Grauwe (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Magdalena Polan

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
+32 16 32 6848 (Phone)
+32 16 32 6796 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
323
Abstract Views
1,882
Rank
178,304
PlumX Metrics