Explaining Welfare State Survival: The Role of Economic Freedom and Globalization
23 Pages Posted: 27 Apr 2006
Date Written: April 19, 2006
Using the economic freedom index and the newly developed KOF-index of globalization, it is shown that the Scandinavian welfare states have experienced faster, bigger and more consistent increases in these areas, compared to the smaller Central-European and the Anglo-Saxon welfare states. The market economy and globalization hence do not pose threats to these welfare states, but are instead neglected factors in explaining their survival and good economic performance. Big government decreases the economic freedom index by definition, but the welfare states compensate in other areas, such as legal structure and secure property rights.
Keywords: state, growth, property rights, globalization, taxation
JEL Classification: H11, P48, F02
Suggested Citation: Suggested Citation