Download Welfare states and its history

Economic Growth & Welfare
Systems
Jean Monnet Chair in European
Integration Studies
Prof. PASQUALE TRIDICO
Welfare states and its history
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
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
Nether
SWE US
Social spending before 1850
1850
1829
1850
1822
England &
Wales
Belgium
Fr
1790
Public education
1833
Relief for the poor
1850
1820-21
1776
1850
1820
0
0,5
1
1,5
% shares of GNP
2
2,5
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).
Social transfer in OECD countries
18
8
18 0
9
19 0
0
19 0
1
19 0
2
19 0
3
19 0
6
19 0
7
19 0
8
19 0
8
19 0
9
19 0
95
35
30
25
20
15
10
5
0
Austria
Denmark
Finland
France
Germany
Social transfer in OECD countries
18
18 80
19 90
19 00
19 10
19 20
19 30
19 60
19 70
19 80
19 80
19 90
95
35
30
25
20
15
10
5
0
Japan
Netherlands
Sweeden
Uk
US
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?

Age distribution
Share over 65
Share under 15
Income
(real gdp)
Accumulated capital
Nonhuman
human
Electoral variables
Social spending/GDP
Public pensions
Welfare and unemployment
Public health
Public education
Prior development
Macro economy
Other
Religion
Openness to trade
Military spending
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.
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

An interesting historical event



The Boer war see wikipedia
During this war, in South Africa, Britain
realized how poor and badly educated and
ill were their solders in comparison with
german solders
German solders were more educated and
healthier because they already enjoyed the
benefit of the bismarkian conservatist
welfare state (based on employment
category and corportation such as Army)
% of household heads having the
right to vote (UK)
% of HH having right to vote
1918
1886
% of HH having
right to vote
1867
1831
1688
5,00
55,00
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”
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
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)
Literacy and public spending
Literacy during 1500-1800 (1)
Country
Austria
Belgium
France
Germany
Italy
Netherlands
Sweden
Portugal
Spain
Literacy in 1500 Literacy in 1800
6
21
10
49
7
37
6
35
12
22
10
68
10
85
1
3
1
2
Literacy during 1500-1800 (2)
Country
Eastern Europe
Russia
USA
UK
China
India
Japan
Other Asia
Africa
Literacy in 1500 Literacy in 1800
1
1
0
10
5-10
2
5-10
3
0
4
4
50
51.5
16-22
3
25-30
3
2
Public spending on education, Total
(% of GNP)
10
France
8
Finland
6
Sweden
4
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
2
Switzerland
Mexico
USA
UK
Public spending on education, Total
(% of GNP)
9
China
7
Chile
5
Netherlands
3
1
0 65 70 75 80 85 90 95
6
19 19 19 19 19 19 19 19
Japan
Canada
Australia
New Zealand
Expenditure per student, primary
(% of GNP per capita)
50
France
40
30
Sweden
20
10
UK
0
0 65 70 75 80 85 90 95
6
19 19 19 19 19 19 19 19
USA
China
India
Netherlands
Japan
Expenditure per student, secondary
(% of GNP per capita)
Japan
Netherlands
India
China
UK
USA
Sweden
France
0
10
20
30
40
Expenditure per student, tertiary
(% of GNP per capita)
95
France
75
Sweden
55
USA
35
UK
Netherlands
1995
1990
1985
1980
1975
1970
1965
1960
15
Japan
Expenditure per student, tertiary
(% of GNP per capita)
360
260
160
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
60
China
India
Impact of population growth
Elderly in the EU and US
% of elderly
France
Germany
Italy
2000 (%)
15.93
16.35
18.17
2050
25.48
28.36
34.88
UK
EU
USA
16.03
16.41
12.51
24.89
28.86
21.73
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)

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

Population Pyramids: 1998
Age dependency ratio
Migration and welfare
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
Immigration to USA 1850 to 2000
1
2
3
4
5
6
7
8
1850
1880
1900
1930
1960
Ireland
Germany
Germany
Italy
Italy
962,000
1,967,000
2,663,000
1,790,000
1,257,000
Germany
Ireland
Ireland
Germany
Germany
584,000
1,855,000
1,615,000
1,609,000
990,000
Britain
Britain
Canada
United Kingdom
Canada
379,000
918,000
1,180,000
1,403,000
953,000
Canada
Canada
Britain
Canada
United Kingdom
148,000
717,000
1,168,000
1,310,000
833,000
France
Sweden
Sweden
Poland
Poland
54,000
194,000
582,000
1,269,000
748,000
Switzerland
Norway
Italy
Soviet Union
Soviet Union
13,000
182,000
484,000
1,154,000
691,000
Mexico
France
Russia
Ireland
Mexico
13,000
107,000
424,000
745,000
576,000
Norway
China
Poland
Mexico
Ireland
13,000
104,000
383,000
641,000
339,000
1
2
3
4
5
6
7
8
1970
1980
1990
2000
Italy
Mexico
Mexico
Mexico
1,009,000
2,199,000
4,298,000
7,841,000
Germany
Germany
China
China
833,000
849,000
921,000
1,391,000
Canada
Canada
Philippines
Philippines
812,000
843,000
913,000
1,222,000
Mexico
Italy
Canada
India
760,000
832,000
745,000
1,007,000
United
Kingdom
United
Kingdom
Cuba
Cuba
686,000
669,000
737,000
952,000
Poland
Cuba
Germany
Vietnam
548,000
608,000
712,000
863,000
Soviet Union
Philippines
United
Kingdom
El Salvador
463,000
501,000
640,000
765,000
Cuba
Poland
Italy
Korea
439,000
418,000
581,000
701,000
For all countries
http://pwt.econ.upenn.edu/php_site/pwt6
1_form.php
 http://www.who.int/nutgrowthdb/databas
e/en/
 http://www.fao.org/es/ess/index_en.asp
 http://www.ifpri.org/data/data_menu.asp

China

China : government expenditure,
growth, poverty, and infrastructure,
1952-2001.
For information please visit:
http://www.ifpri.org/data/dataform.htm
Ottoman Empire

http://www.ottoman.uconn.edu/data.htm