Library Header Image
LSE Research Online LSE Library Services

Household finance and the welfare state: a case study of the United States, 1980-­2010

Gerba, Eddie and Schelkle, Waltraud ORCID: 0000-0003-4127-107X (2014) Household finance and the welfare state: a case study of the United States, 1980-­2010. . London School of Economics and Political Science, London, UK.

PDF - Published Version
Download (1MB) | Preview


The sharp rise in household finance, both in debt and in assets, is one of the striking empirical facts about the US economy of the last two decades. But it is still not clear what caused it. Economists, both mainstream and heterodox, seek an explanation in financial market innovation and liberalization. But it is hard to find systematic evidence for this link. Our paper takes up another line of inquiry. Political economists have started to ask how the restructuring of the welfare state may have affected household finance. We use SVAR analysis to establish whether there is a link between the retrenchment of public social spending and the expansion of tax-­‐incentivised private social spending, on the one hand, and household finance variables on the other. More specifically, we ask whether the transformation of the US welfare state over the last 30 years has affected household finances through the channel of debt, leverage, or asset formation. Our findings suggest that the asset channel is empirically the most likely candidate and we point to some welfare state reforms that can support the operation of this channel since the mid-­‐1990s

Item Type: Monograph (Working Paper)
Official URL:
Additional Information: © 2014 The Authors, European Institute, London School of Economics and Political Science
Divisions: European Institute
Subjects: E History America > E151 United States (General)
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
H Social Sciences > HQ The family. Marriage. Woman
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E21 - Macroeconomics: Consumption; Saving; Aggregate Physical and Financial Consumer Wealth
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H31 - Household
H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
Date Deposited: 12 May 2014 13:48
Last Modified: 15 Sep 2023 23:32

Actions (login required)

View Item View Item


Downloads per month over past year

View more statistics