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The Welfare State

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The Heterogeneity Link of the Welfare State and Redistribution

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Abstract

The welfare state is an instrument used by governments seeking to ensure their population against possible risks and vulnerabilities. While all high-income countries provide some form of welfare state protections, the range of welfare state experience and practices varies across them enormously. At one end of the spectrum is the American welfare state with limited degree of support to the poor and other vulnerable groups, especially in the form of means-tested benefits. At the other end are the Nordic and especially Swedish welfare states that provide comprehensive forms of insurance and assistance helping to keep poverty and inequality low. In between are other countries that have utilized welfare state policies to varying degrees, depending on their need and political supports. No doubt, different components of the welfare state have been introduced to address specific social needs and vulnerabilities that vary across countries as well as over time. But it is important to understand how the provisions and practices of welfare state policies vary across countries and over time as a necessary first step to analyze why they vary at all.

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Notes

  1. 1.

    At the two extremes of this classification were the residual and institutional welfare states that regarded the role of the state in mitigating social risks and poverty to be minimal and comprehensive, respectively, whereas the industrial achievement welfare states sought to use social protection to complement for the workings of the labor market depending on need (Titmuss 1958).

  2. 2.

    This difference applies to other countries as well since most countries even within the liberal and conservative groups offer very different degrees of protection across many welfare state components. The lack of universal healthcare coverage in the United States is at odds even within the liberal group even though it makes this country’s social protection system with no other universal coverage (other than Social Security and Medicare) internally consistent. The relatively more generous social protections in the Netherlands and greater roles of families in southern Europe—particularly Italy and Spain—make the category of conservative welfare state regimes internally less consistent.

  3. 3.

    This latter issue is examined in Chap. 4 using poverty and inequality as the two important indicators of its redistributive consequences, with Chap. 6 exploring why they vary across countries and over time.

  4. 4.

    Many studies have attempted to examine the roles of welfare state policies on redistributive outcomes (Alesina and Glaeser 2004; Kenworthy 1999; Korpi and Palme 2003; Makinen 1999; Scruggs and Allan 2006a). Even though they involve measuring the efforts in welfare state policies, the measurement per se is not their primary focus. These impacts or outcomes of welfare state policies are examined more systematically in Chaps. 4 and 6.

  5. 5.

    This signifies the size of after-tax benefits that are payable to an individual earning wages at the level of average production worker (APW) relative to her or his after-tax income.

  6. 6.

    With some central elements of social protection included, other elements not captured here are also expected to exhibit similar degrees of social protection across countries. Healthcare and education are two prime examples, the provisions on which can be expected to be similar to those on income maintenances.

  7. 7.

    Data for years beyond 2002 are unavailable from the source. While these measures could be recalculated by collecting more recent data and following the exact same methodology, this would involve more than what is central for this analysis and may even lead to inconsistent estimates. Finding the appropriate administrative data for all countries and years would also be a major challenge.

  8. 8.

    The cases of Switzerland and especially Ireland are in point, where their welfare state policies and family responsibilities have not been specifically labeled in Esping-Andersen (1999), even though their systems align broadly with countries in the conservative or Christian democratic and liberal or residual categories respectively.

  9. 9.

    Yet, the specific programs included in these two sets of measures are not necessarily consistent. These inconsistent expenditures, for example, include the transfers through programs related to healthcare, family allowance, and the labor market such as earned income tax credits, making the direct comparisons more complicated.

  10. 10.

    The changes enlarged by the relative size of nonworking population can be observed particularly in cases of Austria, Denmark, Germany, the Netherlands, and Switzerland. The relatively small size of nonworking population, for example, has elevated the relative size of expenditures in Austria, whereas quite the opposite has occurred in Denmark especially when compared with Sweden, the country with the largest size of expenditures, as the reference category. More specifically, the ratio of nonworking population is slightly higher (over 38 %) in Belgium, France, Ireland, Spain, Sweden, and the United Kingdom, lowering the relative sizes of their public social transfer expenditures when compared to other countries (about 36 %).

  11. 11.

    In fact, this cutoff has consistently been applied throughout the analysis in this book (e.g., see Chap. 2) whenever the goal is to generate broader distributional categories.

  12. 12.

    Two points of clarification are noteworthy about this classification. First, the use of two measures related to social transfer expenditures shows an obvious bias toward financial practices. Yet, this approach is useful given the ability to account for the impact of the size of nonworking population as social transfer expenditures are directly linked with the size of target population. Second, albeit arbitrary, this approach leads to a reasonably accurate portrayal of the broader categories of countries in terms of their size and degree of welfare state extensiveness. While other quantitative procedures including indexing or factor analysis are possible, they do not always lead to better outcomes than does this simplified approach, the process of which is visually more appealing.

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  1. Public Affairs and Administration, Western Michigan University, Kalamazoo, MI, USA

    Udaya R. Waglé

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Waglé, U.R. (2013). The Welfare State. In: The Heterogeneity Link of the Welfare State and Redistribution. Springer, Cham. https://doi.org/10.1007/978-3-319-02815-6_3

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