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Globalization and social spending

de Grauwe, Paul and Polan, Magdalena (2005) Globalization and social spending. Pacific Economic Review, 10 (1). pp. 105-123. ISSN 1468-0106

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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 social spending affects the production function of the private sector.

Item Type: Article
Official URL:
Additional Information: © 2005 Blackwell Publishing
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
J Political Science > JZ International relations
Journal of Economic Literature Classification System: F - International Economics > F0 - General
Sets: Departments > European Institute
Collections > Economists Online
Date Deposited: 05 Oct 2012 11:01

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