An analysis of the welfare state from a political economy perspective that examines the effects of aging populations, migration, and globalization on industrialized economies. In The Decline of the Welfare State, Assaf Razin and Efraim Sadka use a political economy framework to analyze the effects of aging populations, migration, and globalization on the deteriorating system of financing welfare state benefits as we know them. Their timely analysis, supported by a unified theoretical framework and empirical findings, demonstrates how the combined forces of demographic change and globalization will make it impossible for the welfare state to maintain itself on its present scale. In much of the developed world, the proportion of the population aged 60 and over is expected to rise dramatically over the coming years—from 35 percent in 2000 to a projected 66 percent in 2050 in the European Union and from 27 percent to 47 percent in the United States—which may necessitate higher tax burdens and greater public debt to maintain national pension systems at current levels. Low-skill migration produces additional strains on welfare-state financing because such migrants typically receive benefits that exceed what they pay in taxes. Higher capital taxation, which could potentially be used to finance welfare benefits, is made unlikely by international tax competition brought about by globalization of the capital market. Applying a political economy model and drawing on empirical data from the EU and the United States, the authors draw an unconventional and provocative conclusion from these developments. They argue that the political pressure from both aging and migrant populations indirectly generates political processes that favor trimming rather than expanding the welfare state. The combined pressures of aging, migration, and globalization will shift the balance of political power and generate public support from the majority of the voting population for cutting back traditional welfare state benefits.

This book surveys the creation and existence of the welfare state in the developed economies, analyzes ways in which problems have emerged, and suggests possibilities for reform.

On the economics of the welfare State

Publisher Description

This Very Short Introduction discusses the necessity of welfare states in modern capitalist societies. Situating social policy in an historical, sociological, and comparative perspective, David Garland brings a new understanding to familiar debates, policies, and institutions.

The welfare state is one of Britain's crowning achievements. Or is it? In this seminal book, now studied in universities in Britain and elsewhere, James Bartholomew advances the sacrilegious argument that, however well meaning its founders, the welfare state has done more harm than good. He argues that far from being the socialist utopia the post-war generation dreamed of, the welfare state has led to avoidable deaths in the NHS, falling standards in schools, permanent mass unemployment and many other unintended consequences. At a deeper level, he contends that the welfare state has caused millions to live deprived and even depraved lives, undermining the very decency and kindness which first inspired it. This landmark book changed the way many people think about the welfare state. It played a major role in the political debate that led to recent reforms. Now with a new introduction by the author assessing the value of these reforms, this classic text still shocks with the power of its arguments and the weight of its supporting evidence.

Evelyne Huber and John D. Stephens offer the most systematic examination to date of the origins, character, effects, and prospects of generous welfare states in advanced industrial democracies in the post—World War II era. They demonstrate that prolonged government by different parties results in markedly different welfare states, with strong differences in levels of poverty and inequality. Combining quantitative studies with historical qualitative research, the authors look closely at nine countries that achieved high degrees of social protection through different types of welfare regimes: social democratic states, Christian democratic states, and "wage earner" states. In their analysis, the authors emphasize the distribution of influence between political parties and labor movements, and also focus on the underestimated importance of gender as a basis for mobilization. Building on their previous research, Huber and Stephens show how high wages and generous welfare states are still possible in an age of globalization and trade competition.