Welfare states and its history

1. Welfare states and its history

2. Peter Lindert • Most of the historical data and the arguments are based on Peter Lindert’s Growing Public (Vol1 and 2). • Social spending and Economic Growth Since the eighteenth century • Period (18th century onwards) • Most of the focus –OECD • World Bank data • Educational expenditure • Birth rates

3. Complex issue • There is always political struggle between those who are likely to benefit from redistribution and those who would be taxed by it • Welfare spending is complicated as government must help people and at the same time must give incentive people for not depending on the government • Also keeping down budget is an important task

4. Social spending before 1850

5. Government welfare spending in developed and developing countries Nita Rudra (2002) Globalization and the decline of the welfare states in Less-Developed countries. Industrial organization. Vol 56(2).

6. Social transfer in OECD countries

7. Social transfer in OECD countries

8. Important questions • Why social spending is so late in the history? • Why did no country spend even 3 percent of its national product to its redistributive programs? • Why now one thirds of GDP is allotted for social spending? • Will the developing countries follow the same route as the developed countries?

9. Age distribution Share over 65 Share under 15 Income (real gdp) Accumulated capital Nonhuman human Electoral variables Prior development Social spending/GDP Public pensions Welfare and unemployment Public health Public education Macro economy Other Religion Openness to trade Military spending

10. How social spending emerged before World War II • There was little spending before 20th century because the political voice was restricted • The important role of political voice is shown in Britain’s high poor relief in 1782-1834 and its cut backs in 1834 and 1870 • Germany and the US were leaders in tax-based public schooling whereas Britain lagged behind.

11. Contd.. • The great advance of social transfers since 1880 is explained partly by political voice, partly by population aging, and partly by income growth • Ethnic homogeneity have better welfare states

12. % of household heads having the right to vote (UK)

13. Poor relief (welfare) • Governments of Europe intervened to keep food affordable during famines • But their price control and market integration decides food crisis in the long run • In 1740 England passed a law for imprisonment of “Rouges, vagabonds, idle and disorderly people”

14. Dutch and German view before 1850 on poor relief • Dutch view: The state must prohibit beggary. But the state can never alleviate poverty. As far as relief for poor is concerned the best institution is the church. • German view: Due to excessive charities of the church the number of poor greatly increased. • 19th century Germans viewed that in France and England pauperism grown though the excessive almsgiving of the Church

15. Reasons for denying relief to poor in great Burstead, Essex, 1823-1828 • Failing to attend worship last Sunday (n=17) • Failing to provide an accurate report of family labor earnings, or known to earn too much for the relief they requested (16) • Refusing to work for a local farmer (10) • Keeping a dog as a pet (5) • Using a doctor other than the one designated by the parish (5)

16. Literacy and public spending

17. Literacy during 1500-1800 (1)

18. Literacy during 1500-1800 (2)

19. Public spending on education, Total (% of GNP)

20. Public spending on education, Total (% of GNP)

21. Expenditure per student, primary(% of GNP per capita)

22. Expenditure per student, secondary (% of GNP per capita)

23. Expenditure per student, tertiary(% of GNP per capita)

24. Expenditure per student, tertiary(% of GNP per capita)

25. Impact of population growth

26. Elderly in the EU and US

27. Ageing and economic burden in the EU The process of ageing is putting European social services under considerable stress: • Old age expenditure (as a % of GDP) has risen significantly since the 1980s and remained stable during much of the 1990s • Old age expenditure represents two fifths of all social expenditure (highest incidence in Italy, Greece, and Spain)

28. Dependency problems • Old age structures and young age structures both create problems with supporting dependents; they are just different problems. • Young age structure requires expanding labor markets, investments in education • Investments in older people less likely to enhance productivity

29. Population Pyramids: 1998

30. Age dependency ratio

31. Migration and welfare

32. Complex relation • Though many industrialized countries talk about their looming pension crisis, US, Canada, Australia and New Zealand are spared relatively due to migration • Many questions to ask in this area • Are the fresh immigrants a net burden on native tax payers • Can Italy solve pension crisis by admitting more young Albanians and France from West Africans • Tax payers and immigrants schooling

33. Immigration to USA 1850 to 2000

35. For all countries • http://pwt.econ.upenn.edu/php_site/pwt61_form.php • http://www.who.int/nutgrowthdb/database/en/ • http://www.fao.org/es/ess/index_en.asp • http://www.ifpri.org/data/data_menu.asp

36. China • China : government expenditure, growth, poverty, and infrastructure, 1952-2001.For information please visit: http://www.ifpri.org/data/dataform.htm

37. Ottoman Empire • http://www.ottoman.uconn.edu/data.htm

38. Presentation and Assignment • Presentation dates • Saturday and Sunday (July 29 and 30 ???) • Assignment • Deadline for the submission is August 7

39. Thank You