The Welfare State and Human Well-Being Around the World: A Cross-National Analysis

  • Published: 07 December 2023
  • Volume 19 , pages 365–380, ( 2024 )

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  • Emma Schmidt 1 ,
  • Alexander C. Pacek 2 &
  • Benjamin Radcliff 1  

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Does the welfare state affect human well-being outside the developed OECD world? For decades scholars have assessed the impact of the welfare state on a variety of outcomes, largely economic and social (for reviews see Kenworthy, Social Forces. 77:1119–1039, 1999 ; Kenworthy & Pontusson, Perspectives in Politics. 3:449–471, 2005 ; O’Connor, Review of Behavioral Economics. 4:397–420, 2017). While more recent focus has shifted to the impact of welfare programs on human well-being, this literature has suffered from several shortcomings. First, there has been an overriding focus on developed core OECD countries. Second, the primary outcome of interest has been on subjective well-being (life satisfaction, happiness). In this paper, we try to address these shortcomings to some extent. First, we extend the analysis to a wider and more diverse sample of countries. Second, we focus on a range of aspects of human well-being beyond life satisfaction. Third, we rely on a new measure of welfare impact that goes beyond mere overall spending—expert survey based coding of social security protections from the global Quality of Government 2021 data set. We find that in our sample of countries, this welfare measure exerts a positive and significant effect on a range of well-being outcomes. Implications for the study of the welfare state and well-being are discussed.

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The measure ranges from 1–10, and countries are scored in the following manner based on the following question: To what extent do social safety nets provide compensation for social risks? 1. Social safety nets do not exist. Poverty is combated hardly at all, or only ad hoc. 4. Social safety nets are rudimentary and cover only few risks for a limited number of beneficiaries. The majority of the population is at risk of poverty. 7. Social safety nets are well developed, but do not cover all risks for all strata of the population. A significant part of the population is still at risk of poverty. 10. Social safety nets are comprehensive and compensate for social risks, especially nationwide health care and a well-focused prevention of poverty.

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Appendix A: Countries in Sample

Czech Republic, Slovenia, Slovakia, Poland, Croatia, Kazakhstan, Lithuania, Belarus, Moldova, Estonia, Albania, Russia, Romania, Ukraine, Kyrgyzstan, Hungary, Latvia, Bosnia & Herzegovina, China, Serbia, Azerbaijan, Tajikistan, Macedonia, Armenia, Georgia, Bulgaria, Costa Rica, Panama, Venezuela, Mexico, Brazil, Singapore, Argentina, Colombia, Chile, Guatemala, Taiwan, Uruguay, Thailand, Malaysia, El Salvador, Bolivia, Jordan, Ecuador, Paraguay, Vietnam, Peru, Algeria, Honduras, Turkey, Pakistan, Nicaragua, Indonesia, South Africa, Dominican Republic, Iran, Tunisia, Laos, Lebanon, Morocco, India, Ghana, Philippines, Bangladesh, Egypt, Iraq, Mongolia,, Ethiopia, Mauritania, Nepal, Syria, Uganda, Cameroon, Yemen, Sri Lanka, Afghanistan, Burkina Faso, Cambodia, Liberia, Tanzania.

Appendix B: Main Variable Descriptions (Variable code from Quality of Government data base, Basic data set https://www.gu.se/en/quality-government/qog-data ). Original data sources listed below,some of which are also from the QoG version as indicated by *

Principal independent variable, social safety nets (bti_ssn).

1–10 scale based on the extent social safety nets provide compensation for social risks.

Social safety nets do not exist. Poverty is combated hardly at all, or only ad hoc.

Social safety nets are rudimentary and cover only few risks for a limited number of beneficiaries. The majority of the population is at risk of poverty.

Social safety nets are well developed, but do not cover all risks for all strata of the population. A significant part of the population is still at risk of poverty.

Social safety nets are comprehensive and compensate for social risks, especially nationwide health care and a well-focused prevention of poverty.

*Source: Bertelsmann Stiftung Transformation Index 2020 ( http://www.bti-project.org/en/home ). Indices based on questions asked of countries experts on 137 middle and low income countries.

Life Satisfaction

Cantril Self-Anchoring Scale of “best possible life” with 0 as lowest possible score and 10 as highest.

Source: Gallup World Poll, accessed through World database of Happiness (worlddatabaseofhappiness.eur.nl).

Healthy Life Expectancy (who_halet)

Healthy life expectancy at birth (years).

*Source: Global Health Observatory, World Health Organization ( http://www.who.int/data/gho ).

Human Capital Index (pwt_hci)

Human capital index based on years of schooling and assumed returns, based on Mincer equation around the world.

*Source: Feenster, Inklaar and Timmer ( http://www.rug.nl/ggdc/productivity/pwt/ ).

Details on variable construction ( https://www.rug.nl/ggdc/docs/human_capital_in_pwt_90.pdf ).

*Women Political Empowerment Index (vdem_gender).

Index capturing greater choice, agency, and participation for women in societal decision-making. Index formed by taking the average of womens’ civil liberties index, womens’ civil society participation index, and womens’ political participation index.

Details on construction of the index can be found here: ( https://v-dem.net/media/publications/v-dem_working_paper_2015_19.pdf ).

Source: Varieties of Democracy (v-dem.net/en/data/).

Principal Dependent Variables

*Gender Inequality Index (gii_gii): Index (0–1) measures gender inequality in three aspects of human development-reproductive health, measured by maternal mortality ratio and adolescent birth rates, empowerment measured by proportion of parliamentary seats occupied by women vs. men, and economic status expressed as labour market participation rate of women vs. men . The higher the GII value, the more disparities between women and men and the more loss to human development.

Source: United Nations Human Development Reports ( https://hdr.undp.org/data-center/thematic-composite-indices/gender-inequality-index#/indicies/GII ).

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Schmidt, E., Pacek, A.C. & Radcliff, B. The Welfare State and Human Well-Being Around the World: A Cross-National Analysis. Applied Research Quality Life 19 , 365–380 (2024). https://doi.org/10.1007/s11482-023-10247-z

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Issue Date : February 2024

DOI : https://doi.org/10.1007/s11482-023-10247-z

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The Deserving Poor, the Family, and the U.S. Welfare System

Robert a. moffitt.

Johns Hopkins University

Contrary to the popular view that the U.S. welfare system has been in a contractionary phase after the expansions of the welfare state in the 1960s, welfare spending resumed steady growth after a pause in the 1970s. However, while aggregate spending is higher than ever, there has been a redistribution away from non-elderly and non-disabled families to families with older adults and to families with recipients of disability programs, a redistribution away from non-elderly nondisabled single parent families to married parent families, and a redistribution of transfers away from the poorest families to those with higher incomes. These redistributions likely reflect long-standing, and perhaps increasing, conceptualizations by U.S. society of which poor are deserving and which are not.

The nature of the U.S. welfare system has been a subject of long-standing research interest among those who study low income and disadvantaged families and children, for the country’s system of welfare programs has a strong relationship to the family. Historically, for example, the primary recipient group has been single mothers and their children, a group of much research focus given their high rates of poverty and the implications of that poverty for children. The role of absent fathers and their relationship to children, and the role of the child support system, has been another focus of research relating the welfare system to the family. The welfare system also provides support that is quite different depending on whether individuals are single or in a union, whether children are present in the family, whether a male and female partner are married or cohabiting, and whether the adults are biologically related to the children. In all of these classic areas of research on the family, the welfare system plays a role.

This paper will address two broad questions about the evolution of the U.S. welfare system and how that evolution has resulted in changing patterns of support for families of different types The first question is simply whether the welfare system, taken as a whole, has become more or less generous over time. I will argue that the common view among researchers and many, though perhaps not all, members of the public is that the system had its greatest expansion in the 1960s and early 1970s, partly stemming from the War on Poverty, but that that expansion was halted, if not reversed, some time later; and that we have been in a contractionary period for two or three decades. I will note the scholarly research that supports this view and will examine the evidence to determine whether it is correct.

The second question is whether, given whatever has happened to the generosity of the system in aggregate, the distribution of support across different family types and across families at different points in the income distribution has changed. Here I will examine whether trends in support have been different for single mothers and their children, married couples with children, and childless families, for example. I will also examine whether support has evolved differently for the poorest of the poor, on the one hand, and for those with still modest incomes but with incomes just below or just above the official U.S. government poverty line, the most commonly used index of economic status among the disadvantaged population. I will also examine whether support has evolved differently for families with older adults and those with disabled family members relative to the rest of the population.

My results show that the aggregate generosity of the system has continually trended upward, albeit with some pauses and slowdowns, and that the rate of spending growth has in fact been greater in some recent periods than it was in the 1960s and early 1970s. However, I will also show that financial support has evolved very differently for different demographic and economic groups, with the disabled and aged experiencing much greater increases in support than the rest of the population, and with much slower rates of increase, if not decreases, for single mothers and their children. I will also show that there have been decreases in support for families with the lowest incomes and increases in support for those with higher incomes. I will interpret these changes in the distribution of benefits as reflecting centuries-old notions of which of the poor are “deserving” and which are not ( Katz, 1989 ).

One well-known topic to which I will devote minimal scant attention is whether the U.S. welfare system has encouraged nonmarital childbearing and the formation of single parent families, and whether it has discouraged work. These issues are important not only for their own interest but also because, if family and work behaviors have been influenced by the welfare system, this could bias trends in support by family type and by level of earnings, which would themselves be affected by the system. At the end of the paper, I will briefly review the existing research literature and will argue that, while some incentive effects of this type are probably present, they are small in magnitude and would not affect the large trends documented earlier in the paper.

A Short Chronology of the Development of U.S. System of Transfers

The modern welfare state in the U.S. was begun in the depths of the Great Depression when Congress passed, and President Roosevelt signed, the Social Security Act in 1935. That Act created three programs: the old-age retirement program that is often simply called “Social Security,” the Unemployment Insurance system, and the Aid to Dependent Children program, or the ADC program (later its name was changed to Aid to Families with Dependent Children, or AFDC, which is what it is generally known as now). The first two of these are “social insurance” programs, which are programs that base eligibility on having worked a sufficient amount in the past and having had a sufficient level of earnings to quality. For example, currently an individual establishes eligibility for Social Security retirement benefits only if he or she has worked at least 10 years in so-called covered jobs and has earned at least $1,200 per quarter. Likewise, eligibility for Unemployment Insurance payments is based on whether an involuntarily unemployed individual has had a certain amount of work and earnings in the past year or so, depending on the state of residence. The important feature of social insurance programs is that they do not base eligibility primarily on current income or poverty status and, in fact, to the extent that poor individuals tend to have spotty employment histories and low earnings, they are less likely to be eligible for these programs in the first place. However, despite the fact that these two social insurance programs are not specifically directed to the poor, their enormous size means that they do, in fact, provide large transfers to poor elderly families and to poor unemployed families at the same time they are providing payments to middle class families. In 2007, for example, expenditures in the Social Security retirement program were $485 billion and were $30 billion in the Unemployment Insurance program (and this was a low unemployment year). This compared to, for example, $12 billion in the cash portion of the TANF program, which is the current name for the former AFDC program.

But the third program, Aid to Dependent Children, was explicitly directed to poor families, by providing benefits to families where there were children but where one biological parent was absent from the home. But rather than reflecting a sympathetic view of the poor in general, the ADC program was instead intended to support widows with children and women whose husbands had become disabled. In some sense, it was not unlike a social insurance program because it presumed that the husband had provided income to the mother and the children, income which they had lost involuntarily. Since it was assumed that mothers would not work and would stay home with their children, it seemed natural that the children should be helped and that the mother should be helped in the process.

Interestingly, although mothers whose husbands had become disabled were supported by the 1935 Social Security Act through the creation of the ADC program, the Act had no provision for support for the disabled in general. There was intense debate in Congress starting in 1936 over whether a program for the disabled should be included along with the other three ( Berkowitz, 2000 ). There was strong opposition to its inclusion because Congress felt that there was too great a danger that such a program would serve too many men who were not really disabled and who could obtain a job. Debate over whether to have a program for individuals with disabilities continued for the next 20 years, when Congress finally added a program for those individuals in 1956, called the Social Security Disability Insurance (or SSDI) program. When it did so, however, it created a program would only cover the severely disabled to reduce the probability that recipients would be capable of employment. The severity of the eligibility condition in the SSDI program distinguishes the U.S. from many countries in Western Europe, where less stringent definitions are often used and the moderately disabled are often covered. The SSDI program is, again, a social insurance program, for only those who have worked and earned enough in the past are eligible. But, once again, the program is large in size---$99 billion in 2007--and ends up covering many individuals who are in poverty.

After the creation of the three programs in the Social Security Act and the SSDI program, little development in the transfer system occurred until the 1960s. It is widely recognized that the 1960s and early 1970s were a period of major expansion of government social welfare programs. Beginning with the publication of Michael Harrington’s book The Other America in 1962 ( Harrington, 1962 ), which awakened Americans to the existence of widespread poverty in the midst of the country’s general prosperity, and continuing with President Kennedy’s plan to address the poverty problem and then on to President Johnson’s heralded War on Poverty announced in 1964, the need for government intervention to help the neediest families became evident and gained widespread public support.

Interestingly, President Johnson intended the War on Poverty to be focused on education, training, and health programs for the poor, not welfare programs--or, in his words, a “hand up” and not a “hand out.” The Head Start program, which provides early education assistance to children from low income families, is one program of this type. Nevertheless, whether intended by Johnson or not, and whether officially part of the War on Poverty or not, the 1960s and early 1970s were a period in which just about all of the major welfare programs for the poor that are still with us today were created (see Table 1 ). These include the Food Stamp program, which was created in 1964 and which provided food coupons for low income families and individuals. It began as a small voluntary program but was eventually made mandatory for all counties in the 1970s and began its evolution toward the major program it is currently. Medicare and Medicaid were created in 1965. Medicare is the health program for older individuals; it is a social insurance program, not a welfare program, but Congress has made all individuals 65 or older eligible for it even if they have not worked for 10 years in the Social Security system. Medicaid is the medical care program explicitly providing health care to those with low income and assets and hence is directly aimed at helping poor families. It has grown dramatically since 1965, as will be shown below.

Important Dates in the History of the U.S. Transfer System

In 1966, the National School Lunch Program and the School Breakfast Program were formalized, providing subsidized lunch and breakfast meals to low income children. Housing programs were expanded in the early 1970s, for the first time giving low income families a voucher which they could take to a private landlord and only have to pay a portion of the rent on the housing unit. The Supplemental Security Income program, or SSI, which provides cash payments to the aged, blind, and disabled individuals if they have low enough income or assets was created in 1972. Up to that time, there was no national program under which poor aged or disabled were eligible for cash assistance if they did not qualify for Social Security, although there were state programs. The Women, Infants, and Children (WIC) program, which provides food and nutrition assistance to pregnant women and to infants, was created in 1975. Finally, in 1975 Congress passed the Earned Income Tax Credit, or EITC, which gave families who worked a tax credit on their federal income taxes, the credit amount in proportion to their amount of earnings. Economists call this an “earnings subsidy” program because it helps those who work more by supplementing their earned income. While the Earned Income Tax Credit is not ordinarily thought of as a welfare program in the public eye, it does, in fact, fit the definition, because it only gives credits to families where earnings are below an upper level cutoff and is intended to help only those in the population who have low or modest levels of earned income.

As I asserted in the Introduction, the dominant view of researchers is that this era of expansion of the welfare state and programs to help the poor was followed by a long period of retraction and retrenchment, or at least stabilization and failure to further expand. Many observers believe that this began as early as 1971, when President Nixon submitted to Congress, and later resubmitted, a bill to create a guaranteed annual income to poor families called a negative income tax ( Table 1 ). It failed in Congress after both submissions. Later in the 1970s, President Carter formulated a vastly expanded program for the poor with higher benefits, more universal eligibility, and calling for the creation of millions of public service jobs for the disadvantaged. It never made it to the floor of the House. In 1980, Ronald Reagan was elected President, having campaigned on a promise to curtail the welfare state and he continued to enjoy enormous popularity during his two terms in office. In 1984, Charles Murray published an influential volume called Losing Ground ( Murray, 1984 ), which argued that not only had the expansion of the welfare state failed to reduce poverty, it had actually made the problem worse by discouraging the poor from working and giving them incentives to not marry. In 1988, President George H. Bush, a moderate Republican, proposed to Congress a bill to add mandatory work programs to the AFDC program. The bill passed but the implementation of the program never made work mandatory and was widely considered to be a failure. When a Democrat was finally elected to the Presidency, he presided over, and signed in 1996, the most retractionary bill in the modern history of welfare reform, imposing into the AFDC program work requirements backed up by credible and enforced monetary sanctions for noncompliance, and legislating maximum time limits of receipt into the program, which was renamed the Temporary Assistance for Needy Families, or TANF, program. The legislation reduced the number of poor families served by the program by 63 percent within 10 years, effectively removing it as an important program in the nation’s safety net for the poor. Since 1996, welfare reform has been mostly off the political agenda, whether under President George W. Bush or President Obama, with no further major reforms discussed. Jencks, writing in 1992, provided one of the best and most cogent summaries of the post-expansionary era. He wrote that “After 1976 … the idea that government action could solve--or even ameliorate--social problems became unfashionable, and federal spending was increasingly seen as waste” ( Jencks, 1992 , p.70). Jencks wrote these words prior to the 1996 welfare reform as well.

Answering the First Question

With this fairly extended background, let us address the first question of whether the overall generosity of the U.S. system of transfers has grown less generous over the last two or three decades. To take the most comprehensive approach, let us include social insurance as well as welfare (or means-tested) programs first, and let us take the largest 16 of those programs. 1 Government statistics on expenditure--including state and local spending as well as federal--are available back to 1970. Figure 1 shows the pattern of growth of total real per capita spending (to control for natural population growth) from 1970 to 2007, the last year before the Great Recession (it will be considered separately below). As expected, spending rose rapidly from 1970 to 1975, to pick an end year roughly coinciding with the end of the expansionary period noted above, by 60 percent over the short five years; and this would have been larger if pre-1970 data were available. Also as expected, per capita spending rose at a much slower pace, by 25 percent, from 1975 to 1986. But the end date 1986 is selected in Figure 1 , despite the contractionary events after 1986 noted in Table 1 , because spending picked up again after that year. And from 1986 to the end of the period in 2007, spending rose a large 72 percent, larger than in the first period of the early 1970s. While this third period was obviously longer in total years than the initial five-year period, there is no sign of a slowdown in spending growth in that recent twenty-year period. 2 3

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Real Aggregate Transfer Program Spending Per Capita, 1970–2007

Now, one issue with these figures is that they do include major social insurance programs and it is well-known that the Social Security retirement program, to take only one of them, was liberalized repeatedly by Congress over this period and, in addition, toward the latter period the size of the older population was growing. The upper line in Figure 2 shows a data series compiled by the Congressional Research Service ( Spar, 2006 ) for per capita real spending on 84 of the largest means-tested programs in the country, thereby excluding those for social insurance, but the series was not collected after 2004 and only sparsely collected before 1975. The rates of growth of real per capita means-tested spending, in fact, rose faster than total spending, by 90 percent, 18 percent, and 93 percent in the same three periods. Thus, social insurance programs are not responsible for the continue growth of spending in the last period.

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Real Expenditure Per Capita in Means-Tested Programs, 1970–2007

Another issue is that the large rate of growth in the third period may be partly a result of the growth of spending in the Medicaid program, which is by far the largest means-tested program in the country in terms of expenditure, and which has been growing more rapidly than spending in other programs in recent decades. From 1986 to 2007, for example, real per capita Medicaid spending rose by 210 percent. 4 The lower line in Figure 2 returns to the large programs shown in Figure 1 , but excluding not only the five social insurance programs but also excluding Medicaid. While the rate of growth of spending in the third period is now less than that of the upper line in Figure 2 , it is still 69 percent, representing a major increase in spending. To sum up, this evidence, therefore, provides no indication of a more conservative era of retraction and retrenchment that the popular view assumes.

The explanation for the difference in the popular view and the actual experience is, in large part, that the 1996 welfare reform referred to in Table 1 , which dramatically reduced the size and spending in one important program, the AFDC-TANF program, was the exception rather than the rule. This is demonstrated in Figure 3 , which shows per capital real spending growth from 1970 to 2007 for that program but for several other important ones as well. As the line for the AFDC-TANF program in the figure shows, spending in the program took a dramatic dive in the 1990s and, by 2007, spending was only about a quarter of what it was in 1995; and, in fact, it is lower in 2007 than it was in 1970. But spending in the Supplemental Security Income (SSI) program, for example, which pays cash to poor aged, blind, and disabled individuals, rose by 80 percent in the five short years between 1990 and 1995. This extra spending was a result of changes in eligibility rules that allowed more children to be defined as eligible by disability criteria ( Daly and Burkhauser, 2003 ). And the Earned Income Tax Credit (EITC), which provides a tax credit to low-income families with earnings, was greatly expanded by both Presidents George H. Bush and Clinton in the late 1980s and early 1990s, resulting in expenditure growth from 1988 to 1998 of 274 percent and taking it from a minor program in the country’s welfare system to one of the leading ones (and the largest one among those shown in Figure 2 ). Another tax credit, called the Child Tax Credit (CTC), was passed by Congress and signed by the President in 1997 and started up in 1998. The CTC gives low income families with children a significant tax break and, as the figure shows, it is now a major program in the country’s safety net. The Medicaid program--not shown in the figure because the magnitude of the numbers is so much higher than for other programs--also rose dramatically since the mid-1980s as well.

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Selected Means-Tested Program Spending Per Capita, 1970–2007

The Food Stamp program is shown in the figure to have grown up through the 1980s, then fell as the economy improved in the later 1980s, but then rose again to a new peak in the early 1990s as a result of changes in the program that liberalized various rules. The most interesting aspect of Food Stamp program spending growth is that, after falling in the late 1990s as a result of the improvement in the economy, it resumed growth through the middle and latter part of the 2000s despite a falling unemployment rate over the period, growing by 20 percent from 2003 to 2007. The reason for the increase was that the U.S. Department of Agriculture reformed the program to reduce barriers to participation and to reduce paperwork, and encouraged families who were eligible but hadn’t applied to apply for benefits, a conscious and deliberate expansion of the program. 5

Answering the Second Question

Although aggregate spending continued to rise after the mid-1980s, and even accelerated for many programs, whether the distribution of that spending across families of different demographic and economic types is a separate question. Indeed, that the distributional impact of the rise in aggregate spending may not have been neutral is already suggested by Figure 3 , for most of the programs which grew served different types of recipients than the program which fell (AFDC-TANF). The SSI program, to take an obvious example, serves only the aged, blind, and disabled, not the poor population in general or even single mother families, one of the major groups served by AFDC-TANF. Further, the EITC by its structure does not serve any family with no workers because it is an earnings subsidy. Indeed, the largest tax credits in the EITC program go to families whose earnings are roughly between $10,000 and $20,000 a year, which means that it does not primarily serve those who are the most disadvantaged. The CTC, as will be noted below, shares this characteristic with the EITC. The Food Stamp program is the only program that serves all family types equally (that is, if they have low income and assets) and also serves those who have no other income, including no earnings. But that program also only provides benefits for food purchases and, in magnitude, benefits from the program are far less than the benefits that were provided by AFDC-TANF or those provided by the SSI program, for example, both of which are intended to assist in all the living needs of the family or individual.

In addition, if we return to social insurance programs, which we have not considered in order to focus on welfare programs, the evidence also shows that the programs that have expanded the most are Medicare, Social Security Retirement, and the SSDI program for the disabled. Many of the recipients of those programs, as noted before, are poor, but nevertheless those programs only benefit older individuals and the disabled. Poor families in these groups are in need of assistance from the government but, once again, this merely demonstrates how many of the programs that have grown in size serve specific needy groups.

Nevertheless, a close examination of distributional changes requires data on individual families and the benefits they receive. For this purpose, I draw upon recent work by Ben-Shalom et al. (2012) which used the Survey of Income and Program Participation (SIPP) to examine this question. The SIPP is perhaps the best data set for this type of examination, for it is a representative household survey of the U.S. noninstitutional population conducted by the U.S. Bureau of the Census which has as one of its main goals the collection of information on receipt by families of benefits from all major transfer programs, both social insurance and welfare. Specific questions in the survey on each program are asked and underreporting of benefits is much lower than in other surveys such as the Current Population Survey ( Meyer et al., 2009 ). But the SIPP was only begun in 1983 and the last survey before the Great Recession was conducted in 2004, so the 1983–2004 period is the only period that can be examined with these data. Nevertheless, this period covers both the contraction of the AFDC-TANF program as well as the expansion of many of the other programs discussed above and hence should bear directly on the question of interest.

Ben-Shalom et al. calculated, for each family, the total amount the family received from all major social insurance and means-tested programs in the month prior to interview, except Medicaid and Medicare. Medicaid and Medicare have to be excluded because families answering a household survey do not know how much the government has spent on their health care under those programs, and that is the relevant figure for these calculations. Ben-Shalom et al. totalled up the family benefit receipt from all major programs from which each family received benefits, and examined how that total varied across different types of families and how the total changed between 1983 and 2004 for those different types. 6

Figure 4 and Figure 5 illustrate some of the results of their study. 7 Figure 4 shows the average monthly benefits received from all transfers programs in 1983 and 2004 for families with an older head (62 years or age or over), families with an adult receiving SSI or SSDI 8 , and the residual category which I term non-elderly non-disabled families. The figure shows mean total transfers over all families of each type, whether receiving benefits or not from each of the programs, and hence represents a weighted average of benefits received among recipients of each program weighted by the fraction of the group receiving benefits from each program. The figure clearly shows that families with older adults and families with disabled members receive much more in transfers than other families, which is a result of the high rate of receipt of Social Security retirement benefits by older individuals and of the relatively high benefit amounts in the retirement program and in SSI and SSDI, i.e., they are intended to cover all expenses, not just food or medical care, and are much higher than AFDC-TANF benefit amounts as well. More relevant to the issue here is the change over time, where the figure shows that, while all three types of families experienced increases in benefits, the families with older individuals and with disabled members received greater increases than non-elderly nondisabled families in absolute magnitude ($208, $74, and $20, respectively) although in percent terms the third group had a somewhat large increase because of its small base (percent increases for the three are 19, 6, and 13, respectively). Thus the share of transfer benefits received by older adult families necessarily rose between 1983 and 2004, and the benefits for the disabled also rose significantly, which type of redistribution of total benefits.

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Monthly Benefits Received in 1983 and 2004 by Families by Age and Disability Status.

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Monthly Benefits Received in 1983 and 2004 by Non-Elderly, Non-Disabled Families by Family Type

Table 5 shows similar figures for non-elderly, non-disabled single parent families, married parent families, and childless individuals and families. 9 Here again we see that the size of transfers differs markedly across groups, with single parent families receiving more than married parent families, and childless individuals and families receiving very little from the U.S. transfer system. However, here the differences in changes in benefits over time for the three groups are dramatically different, with transfers to the average single parent family falling by 20 percent and those to the average married parent family rising by 68 percent. The decline for single parent families reflects the contraction of the AFDC-TANF program combined with increases in transfers from other programs which were smaller in magnitude because those other programs largely served different family types. Transfers to childless individuals and families were essentially unchanged, rising by a small 7 percent. These results imply a redistribution of benefits away from single parent families toward married parent families.

These figures suffer from the obvious problem that income is not being controlled for, and transfers should ordinarily be expected to flow disproportionately to those with low income. It is possible that the redistributional movements shown in Figure 4 and Figure 5 could be the result of differential changes in income across the different groups, which would give them a rather different interpretation. To address this issue we must condition on private income for each family. To this end, define private income for a family as the sum of its earned income and its private unearned income. For most families eligible for welfare programs, private unearned income is very small relative to earned income; most families have very little capital income and only miscellaneous income from other sources (e.g., child support). After calculating each family’s income, I will classify their degree of disadvantage by the relation of their income to the official U.S. government poverty threshold for their family size, putting families into one of our groups: private income less than 50 percent of the poverty threshold (so-called “deep” poverty), private income greater than 50 percent but less than 100 percent of the threshold (the “shallow” poor), private income greater than the poverty threshold but less than 150 percent of it (the “near-poor”), and greater than 150 percent but less than 200 percent of the threshold (the “non-poor”).

Figure 6 , Figure 7 , and Figure 8 show the results when the three groups in Figure 5 are broken out by the level of their private income relative to the poverty threshold. Figure 6 , for example, shows the results for single mother families. If their overall decline observed in Figure 5 had been solely a result of a change in the private incomes of those families, the average benefit levels for the four separate private income groups would have been stable over time, but the fractions in each group would have changed. Instead, what is shown is a sharp decline in the transfers made to the poorest single mother families, those in pre-transfer deep poverty, by a remarkable 35 percent. At the same time, the transfers made to single mother families in shallow poverty rose by 73 percent and as did those in the near-poor and non-poor groups (75 percent and 80 percent, respectively). 10 These patterns are explained by the changes in the AFDC-TANF, Food Stamp, EITC, and CTC programs. On the one hand, the drastic decline in the AFDC-TANF program, meant that, while 57 percent of single mother families in private income deep poverty received support from the program in 1983, only 20 percent did by 2004. Real benefits of recipients also fell. In addition, the percent of deep poverty families receiving Food Stamps declined from 73 percent to 54 percent over the same period, probably because AFDC recipients were automatically eligible for Food Stamps whereas non-AFDC recipients have to make an independent application to the program. On the other hand, the major expansion of the EITC program in the late 1980s and early 1990s provided significant additional support to working single mother families above about $10,000 of annual earnings. And the introduction of the CTC, which is a non-refundable tax credit--meaning that only families with positive tax liability are eligible and therefore the size of the credit grows as earnings grow, up to a point--led to additional government support for working single mother families but little or no support to those with low levels of private income. The net result was another redistribution of benefits, in this case from the poorest single mother families to those with higher incomes.

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Monthly Benefits Received in 1983 and 2004 for Non-Elderly, Non-Disabled Single Parent Families by Private Income Level

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Monthly Benefits Received in 1983 and 2004 for Non-Elderly, Non-Disabled Married Parent Families by Private Income Level

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Monthly Benefits Received in 1983 and 2004 for Non-Elderly, Non-Disabled Childless Individuals and Families by Private Income Level

Figure 7 shows the same pattern for married-parent families, with declines in support among those in pretransfer deep poverty (31 percent decline) and large increases for those with higher incomes (ranging from 75 percent to 138 percent increases). 11 Part of the decline among the poorest families of this type was also from the decline of the AFDC-TANF program for, while the participation rate of married couples in 1983 was less than half of what it was for single mother families, it was still substantial. The AFDC program did allow two-parent families to participate in the program and, in addition, stepparent families have always been treated by the program as single parent families since both biological parents are not present in that case ( Moffitt et al., 2015 ). Married parent families in deep poverty also experienced declines in Food Stamp receipt and in UI receipt. At the same time, married parent families with higher incomes received even greater EITC payments than working single mother families because the former had both higher earnings levels and more children, both of which raise EITC benefits in the relevant ranges.

Figure 8 shows a similar pattern for childless families and individuals but the amounts are very small and there was only a few dollars’ difference in the two years’ benefit levels. The major benefits received by the low-income childless are Food Stamp and UI benefits, although working families could receive a small tax credit from the EITC as well. 12

Transfers to families with older individuals, individuals receiving disability benefits, and the residual non-elderly nondisabled group can also be separated by private income category. Figures for their trends in benefits are not shown for brevity. However, almost all of the first two groups are not working, so a comparison with the few families who work is not particularly important. However, the results show that average benefits for both these two groups rose from 1983 to 2004, even those with private incomes less than 50 percent of the poverty threshold. Once again, the sizable increases in benefits from the Social Security Retirement program, the SSDI program, and SSI are responsible for this result.

The results in this section of my paper allow me to answer the second question I posed at the beginning, of whether there has been a change in the distribution of transfer benefits to low income families within the overall growing total size of total transfers. The results show that there have been three major redistributions. First, there has been a redistribution away from non-elderly and non-disabled families to families with older adults and to families with recipients of disability programs. Second, there has been a redistribution away from non-elderly nondisabled single parent families to married parent families. Third, within single parent and married parent families, there has been a redistribution of transfers away from the poorest families to those with higher incomes, those with incomes just below and just above the official government poverty threshold. These developments constitute a new type of “diverging destinies” ( McLanahan, 2004 ), although in this case not between those from low income and middle income families, but between different types of families within the low income population. 13

Caveats and Concerns

Three different caveats and concerns are worth addressing. These include the importance of the Medicaid program, the impact of the Great Recession, and the relevant of incentives to work and to change family structure. All of these issues could in principle affect the results on trends in redistribution found in the previous section.

The Medicaid program is omitted from the benefit calculations because government spending on each individual family cannot be obtained in a household survey. Yet those eligible for Medicaid can receive it even if not working and hence it is an important benefit for the poorest families. In addition, there were significant expansions of eligibility over the 1983–2004 period for, while in 1983 most eligibles were single mothers on AFDC, in the late 1980s and early 1990s eligibility was extended to poor pregnant women in general and later to most children in poor families. Later, many states extended eligibility to many parents in low income families in general as well. In addition, looking to the future, Medicaid eligibility expansions under the Affordable Care Act are likely to make even more low income families eligible.

On the other hand, some researchers have obtained data from different sources which have information on medical spending under Medicaid for individual families ( Burtless and Svaton (2010) and Burkhauser et al. (2013) ). Those studies have noted that if Medicaid is included as a transfer, logic requires that the value of employer-provided health insurance also be included. When both Medicaid and employer-provided health insurance are both valued and added to individual incomes, the result is a remarkably distribution-free change in inequality, with the additions to middle-income families about the same, or sometimes greater, than those going to low-income families. A similar issue going forward will arise with the Affordable Care Act, for that legislation also introduces new subsidies for private health insurance for those families with incomes between 133 percent and 400 percent of the poverty line, which means a further increase in implicit government transfers to the higher income portion of the disadvantaged population. Even one of the Medicaid provisions in the Affordable Care Act, that which encourages states to raise their upper income eligibility levels from where they often are now--often below the poverty line--at least up to the poverty line, which will benefit the shallow poor, not the poorest families. Consequently, it is unclear at the present time how much adding Medicaid would change the conclusions reached in the last section, although this is certainly an important topic for subsequent research.

Much attention has also been focused recently on the performance of the safety net during the Great Recession, roughly between 2007–2008 and 2012. The federal government expanded many of the major transfer programs significantly during the Recession. Benefit levels for the Food Stamp program were raised and eligibility requirements were relaxed, EITC amounts were increased for large families, additional funds were provided for the TANF program, amounts for the CTC were increased, income and payroll tax rates were temporarily reduced for low-income families, and one-time extra benefits were given to Social Security retirement and SSI recipients. An additional major legislative change involved the Unemployment Insurance (UI) program, where the potential duration of benefits was increased, benefit levels were raised, and states were encouraged to broaden the bases for eligibility. For present purposes, the question is whether these additional benefits were provided in equal or unequal measures to different family types and to those of different income levels, and whether therefore the redistributional trends noted in the last section were continued or countered. Interestingly, the evidence on this question indicates that, contrary to the long-term trend, the additional benefits provided went to both single parent and married parent families, childless individuals and families as well as those with children, and were about equally spread among those in deep poverty and those with higher income levels ( Moffitt, 2013 ). The poorest families received major increases from the Food Stamp and UI programs, while millions of families who lost their jobs but still had significant earnings (e.g., above $10,000 a year) received additional EITC benefits.

Nevertheless, at this writing, most of these temporary expansions have phased out. Some of the EITC and CTC changes have been extended a bit further, and some of the UI eligibility changes are likely to stay. Aside from these, however, the safety net will return to its pre-Recession structure. Consequently, for the safety net as a whole, there is no indication that the long-run trend of reduction in support for single mothers and for the poorest families and increases in support for married parent families and better-off working families will be reversed.

Finally, a traditional issue with examining how safety net programs affect low-income families is whether those programs discourage work and hence increase the proportion of families with very low or zero earnings, and whether those programs encourage the formation of single-parent families. The research evidence to date suggests that these issues are of little or no importance for the purposes of this paper for several reasons. First, the existing evidence shows that neither work disincentives nor family structure incentives are large in magnitude, especially in the aggregate. Ben-Shalom et al. (2012) reviewed the existing evidence on work disincentives for all major transfer programs and found that, while some of them appear to induce non-trivial reductions in work effort among the recipients of some programs, the aggregate effect on earnings in the low income population is almost zero because too few families participate in programs where those reductions occur. As for family structure incentives, a large body of research on this question for the AFDC program failed to show any major effects on the fraction of single mother families, although the evidence suggests that there may have been a small effect ( Moffitt, 1998 ). Research on the effects of the 1996 reform of the program on family structure also has shown very mixed results and no evidence of any major effect ( Grogger and Karoly, 2005 ).

Second, however, the calculations in the previous section were of average benefits conditional on level of earnings and conditional on family structure, and hence any effect of the program on changing the proportions of families at different earnings levels or in different demographic groups should not, at least at the simplest level, affect the level of transfers conditional on belong to one of those earnings or family type groups. Further, with regard to the trends noted above, if anything, the work disincentives of the nation’s transfer programs should have declined from 1984 to 2004 as benefits for nonworkers declined and benefits for workers increased. If anything, work incentives should have increased. The decline in benefits for single mother families and the increase in benefits for married parent families should, likewise, have provided even fewer incentives for single motherhood and greater incentives for marriage over time.

The Deserving Poor

While I am not a professional political scientist or even sociologist, I nevertheless suggest that one explanation for the changing distribution of transfer benefits I have uncovered can be traced to long-standing concepts of what is called the deserving poor. I am far from the first to note that the U.S. society has, for most of its history, starting in the 18th century, made distinctions between which poor families are deserving and which are not, just as some of our forebears in England did with the English Poor Law ( Katz, 1989 ; Iceland, 2013 ; Jencks, 1992 ; Patterson, 1994 ). In the eyes of the American voter, those who are deserving are those who work, who are married or at least widowed, and who have children. Those who are undeserving are those who do not work, who are single parents, and who do not have children. In colonial America, the elderly and children were also seen as more deserving than prime-age adults ( Iceland, 2013 , p.13). Interestingly, the research literature just referred to also reveals that, historically, simply receiving government assistance has been taken itself as a sign of undeservingness, a signal that the individual has not been exerting enough effort on his or her own. This notion dates to the England and the English Poor Law of 1984, where the “pauperism” referred to those who were receiving relief and were less deserving than the more honest individuals who were desperately poor but not receiving government help. A similar conceptualization appeared in the popular debate over the 1996 welfare reform law and its subsequent discussion, where welfare “dependency”--meaning simply receiving benefits--was taken as an object of its own to be reduced, for its own sake, and independent of whether such reductions reduced the incomes of the poor. Another interesting parallel to current economic developments is that in certain historical periods, like the early 19th century, many prime-age unemployed men were unable to find jobs because of rapid technological change such as the mechanization of agriculture ( Iceland, 2013 , p. 13). Today, the emergence of skill-biased technological change, with its increasing demand for workers with high skill levels and decreasing demand for workers with low levels of skills and education, is a leading explanation for the decline in earnings among the most disadvantaged and rise in their unemployment levels. As occurred in colonial times, when unemployed men were treated as lacking effort, low-skill men without jobs today are often similar regarded as being at fault for their lack of employment.

While these distinctions have been made for a long period of time, they have grown sharper over the last 20 or 30 years in the U.S. The emphasis on work in welfare programs has grown as work requirements have been added to various programs and as some of the major expansions in welfare programs have only been directed to help those with earnings. For women, it is often argued--as by Garfinkel and McLanahan in their landmark 1986 volume on single mothers, for example--that this change in attitudes has its source in the rise in employment among middle-class and higher-educated women, leading to a greater expectation that all women today should work, even if they have young children and even if their job opportunities and skill levels are low ( Garfinkel and McLanahan, 1986 ). The growing negative attitudes toward the AFDC program which contributed to the 1996 reform were in part a reflection of the changing nature of its caseload, from one composed primarily of widows to one composed primarily of never-married mothers. In 1942, 59 percent of AFDC adult recipients were widows or widowers or were married to spouses with disabilities, but by 1992, 58 percent of the caseload consisted of the much less popular group of unmarried mothers.

As for families with older adults, the impact of government transfer programs, especially the Social Security retirement program, is well known (see Kathleen McGarry (2013) for a recent contribution). Also, the PAA Presidential Address by Preston (1984) noted the increase in government support of the elderly relative to that of children. Preston gave a number of explanations for this trend rooted in the political process. I would only add to his account that the disabled have been similarly favored, and that includes disabled children as well as adults (Christopher Jencks also adds the disabled to the elderly as a favored group). I would probably add to Preston’s account that those without children are even less favored than those with children.

To economists, the distinction between more and less deserving families is at odds with their classic models of how welfare should be delivered, as formulated by Milton Friedman (1962) in his proposal for welfare reform in the United States. Friedman argued forcefully that families should be given assistance entirely and solely on the basis of their level of income, and possibly family size, but nothing else. No family or personal characteristics should be used for eligibility or benefit levels, and families with the same level of income should be treated identically. He decried government programs in the U.S. in the 1950s that singled out particular groups for government support (farmers were one of his examples). Friedman thought that making distinctions on the basis of characteristics other than income would lead to support reflecting political lobbying and would harm the economy.

New Directions for Safety Net Policy and Research

It is important to note that addressing the trends noted above with new policies should not be pursued by reducing support for families with older adults, those with disabilities, or those with significant levels of earnings in the low-income population. Those families in these groups deserve support and, particularly for the last group, the long-term trend in providing additional assistance for disadvantaged individuals to work more through additional child care, additional education and training, and earnings subsidies like the EITC is a welcome development. Nor is the solution to the problem a return to a welfare system with completely open-ended transfers available to those who do not work with no questions asked, although the U.S. has never really had such a system. However, the decline in support for the poorest families and for single-mother families is not likely to improve the prospects for their improvement and is, if anything, likely to achieve the opposite. Families in the poorest and most disadvantaged sections of the population face many barriers to work, including low levels of education and literacy, learning disabilities, physical and mental health issues, domestic violence, substance abuse, and criminal histories ( Loprest, 2011 ). The best direction for public policy should be one which searches for a way to support the non-aged, non-disabled families at the bottom of the earnings distribution in ways are that consistent with long-standing American values such as taking responsibility for one’s own actions. The decline of support to families with nonemployed members and to single parents is presumably rooted in the presumption that they have not taken personal responsibility for their own situation. Along with Jencks (1982), Garfinkel and McLanahan (1986) , and many others, we should not dispute the societal norm in favor of work and marriage which gives it such primacy. It is part of the American heritage and has had enormous positive effects on our society. But more needs to be done for those facing the largest obstacles to work, whether it be training programs, more discriminating work requirements, better child care for working mothers, or other forms of employment assistance. And, most importantly, even if their employment and earnings cannot rise to the levels we and they would desire, new ways to assist those families who are making an effort but are not succeeding should be developed for assistance in the short-term and even in the medium term.

As for research, there several areas where more investigation would be worthwhile. The crude demographic categories used in the classifications here miss the important developments in the American family requiring distinctions between never-married and divorced and widowed mothers and children, cohabiting unions, stepparent families, and blended families with children from multiple partners as well as absent fathers. How those more detailed family types have fared under trends in the safety net would be of interest. On a related topic, the calculations here do not account for the variability and instability of government support in response to instability of family types themselves, which requires a more dynamic examination of changes in family structure and corresponding changes (or lack of changes) in government support. Yet another topic is to examine how families with decreasing government support “make ends meet,” in the words of Edin and Lein (1997 )--what strategems they follow to provide for the adults and children in their families. The consequences of decreasing government support for children in the poorest families would also be of interest to investigate, and would tie in with the large and growing literature on the determinants of child development and the consequences for intergenerational mobility and intergenerational transmission of poverty. These and other research topics would contribute to the knowledge base we need for the public policy discussion of these issues.

Acknowledgments

The author would like to thank Andrew Cherlin, Kathryn Edin, and other participants of a seminar at the Hopkins Population Center as well as Sandra Hofferth, Michael Rendall and other participants of a seminar at the Maryland Population Research Center for comments. Nadia Diamond-Smith and Gwyn Pauley provided excellent research assistance. Financial support from the Russell Sage Foundation is also gratefully acknowledged.

Presidential Address to the Population Association of America, Boston, May 2, 2014.

1 The 16 are the Old-Age Survivors Insurance program (i.e., Social Security retirement), Medicare, Unemployment Insurance, Workers Compensation, Social Security Disability Insurance, Medicaid, the Children’s Health Insurance Program, the Supplemental Security Income Program, AFDC-TANF, the Earned Income Tax Credit, the Child Tax Credit, Food Stamps, subsidized housing programs, school food programs, WIC, and Head Start. The one important set of programs that is left out for lack of good data are child care programs.

2 The annualized rates of growth in the three periods are 10, 2, and 2.6 percent, respectively.

3 Spending in the third period also rose relative to GDP, from 9 percent of GDP in 1985 to 12 percent in 2007, a significant and non-trivial increase.

4 Part of this growth is a result of increases in medical care prices, which were rising faster than general inflation over this period. These figures deflate spending by a general price index and hence overstates the growth of real medical care utilization.

5 Some of the decline in spending after 1996 has been attributed to the decline of the AFDC-TANF program as well, for many recipients of that program prior to 1996 had been automatically eligible for Food Stamps.

6 The programs include Social Security retirement, SSDI, Workers Compensation, Unemployment Insurance, AFDC-TANF, Food Stamps, SSI, subsidized housing, veterans benefits, WIC, General Assistance, Other Welfare, the EITC, and the CTC.

7 I have modified the price index and a few of the details of their calculations, and so these figures will not match up exactly to those in their published study.

8 It would be preferable to define a disabled population independent of benefit receipt, but the questions on disability in the SIPP data are not adequate to do so. represents one.

9 The data on cohabitation in the 1983 SIPP is inadequate, so marriage is used to define the first two groups. Families with children are those with children under 18 in the household.

10 The percent of single mothers in the income groups did change somewhat over the period. In 1983, the percent of families in the four groups (out of those with private income less than 200 percent of the poverty threshold) from lowest to highest, were 53, 16, 16, and 14, and they had changed to 41, 22, 21, and 16 by 2004.

11 There are many fewer married parent families in deep poverty--20 percent in 1983 and 17 percent in 2004.

12 Separate tabulations for childless individuals and married childless families show similar, small changes.

13 Some other past research on related topics provides complementary evidence. A literature on “disconnected” families shows a rising fraction of low income families who have little or no earnings as well as little or no cash welfare ( Blank and Kovak, 2009 ; Loprest, 2011 ). And the findings of Shaefer and Edin (2013) show an increase in the number of families with incomes less than $2 per day, which is partly a result of these declines in government assistance for the poorest families.

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  • 171 “Creating Wealth” through Debt: The West's Finance-Capitalist Road
  • 191 Towards a Theoretical Framework for Understanding Capitalist Violence against Child Labor
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The Welfare State and Liberal Democracy: A Political Economy Approach

research paper welfare state

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Abstract

This article attempts to shed some light on the developments of welfare states in highly developed nations since World War Two (WW2) within the context of a narrative which seeks to combine institutional distinctions, termed “varieties of capitalism,” with the historical regimes of regulation theory in a political economy perspective which puts interested political actors at center stage. It will be argued that in a liberal democracy, the elite has the framing and agenda-setting power to “manufacture a political will” according to its interests. The welfare state is not the result of a long social struggle on the part of the needy; rather, it results in its general features from the minimal state of meritocratic exigencies. Under the very peculiar circumstances of the post-WW2 era, this even translated into a rise in social welfare spending to more than a third of national income. The particular design of welfare state organization was the subject-matter of political conflict, and a clear distinction between liberal and coordinated market economies can be attributed to cultural differences and institutional settings. Yet the core of the welfare state conception serves the interest of the meritocracy as much as those who benefit from social programs and redistribution. And the neoliberal attack on the welfare state since the 1980s is not a necessary re-calibration due to changing economic conditions or a growing lack of solidarity among the people but an expression of a modified cost–benefit analysis from the elite's perspective.

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research paper welfare state

Rethinking the Welfare State

Nezih Guner, Remzi Kaygusuz and Gustavo Ventura

taxes and transfers, universal basic income, household labor supply, income risk, Social Insurance

E62, H24, H31

The U.S. spends non trivially on non-medical transfers for its working-age population in a wide range of programs that support low and middle-income households. How valuable are these programs for U.S. households? Are there simpler, welfare-improving ways to transfer resources that are supported by a majority? What are the macroeconomic effects of such alternatives? We answer these questions in an equilibrium, life-cycle model with single and married households who face idiosyncratic productivity risk, in the presence of costly children and potential skill losses of females associated with non-participation. Our findings show that a potential revenue-neutral elimination of the welfare state generates large welfare losses in the aggregate, although most households support the move as losses are concentrated among a small group. We find that a Universal Basic Income program does not improve upon the current system. If instead per-person transfers are implemented alongside a proportional tax, a Negative Income Tax experiment, it becomes feasible to improve upon the current system. Providing per-person transfers to all households is costly, and reducing tax distortions helps providing for resources to expand redistribution.

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Towards A Social Investment Welfare State?Ideas, Policies and Challenges

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With the demise of socialism in Eastern Europe, the Western welfare state is treated as the unquestionable alternative by most intellectuals. They have yet to come to terms with what Claus Offe, the German sociologist, describes as the contradictions of the welfare state and the persistent crises of crisis management. This paper critically assesses Offe's contribution in light of the recent reforms in “really existing socialism.”; The author contends that although Offe's neo‐Schumpeterian argument goes a long way toward explaining the present instability of the welfare state and the contradictions of state intervention in general, including that of the socialist‐interventionist state, Offe does not realize that his analysis casts into serious doubt the claim that the welfare state is a viable corrective to either unbridled markets or state socialism. Critical Review, 4 (2), 1990: pp. 619-632

Claus Offe once suggested that 'while capitalism cannot coexist with, neither can it exist without, the welfare state' (1984: 153, italics in original). Some might dismiss this as a mere rhetorical flourish without theoretical meaning or empirical application. In fact, Offe did attempt to ground his argument in the nature of capitalism; he also noted some of its practical implications. Indeed, his analysis is generally compelling and still repays careful reading. Its main problem lies elsewhere. For, like much theorizing about the crisis of the welfare state in the 1970s and early 1980s, it was shaped by the economic and political horizons of its time. Offe developed his analysis in the context of the postwar Keynesian Welfare State (hereafter KWS) in Europe, North America, and Australasia and did not fully address the more general difficulties involved in capital accumulation. As the Atlantic Fordist system declines further, however, we now have a better understanding of its nature and limitations. It is also easier to distinguish between its particular features and those characterizing capitalism as a whole. Hence my contribution aims to re-specify Offe's analysis for the current stage of capitalism and to ground it in more general aspects of the capital relation.

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What, in fact,isthe Welfare State? This article traces the emergence of the welfare state as a specific mode of government, describing its distinctive rationality as well as its characteristic forms, functions and effects. It identifies five sectors of welfare governance, the relations between them, and the various forms these take in different times and places. It discusses the contradictory commitments that shape welfare state practices and the problems associated with these practices and contradictions. It situates welfare state government within a long-term account of the changing relations between the social and the economic spheres. And it argues that the welfare state ought to be understood as a “normal social fact”—an essential (though constantly contested) part of the social and economic organization of modern capitalist societies.

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Stefano Agnoletto, Brian J Griffith, and Cristina Palmieri, eds. "The Origins of the Welfare State: Global and Comparative Approaches" Zapruder World: An International Journal for the History of Social Conflict 3 (2016) ISSN: 2385-1171 View Volume: http://www.zapruderworld.org/volume-3/ "Composite abstract notions are bound to inject confusion into any debate concerning what exactly they represent, what their limits are, what to focus on, etc. This is especially true with politically charged concepts such as the “welfare state,” and it is tempting to give up on the exercise altogether. However, for socially engaged scholars who are acutely aware of the fact that some of the recent places and times in which wellbeing became a matter of citizenship have been amongst the most civilized in the history of humanity, understanding the origins of the welfare state becomes a matter of its survival. Indeed, immersed as we are by the “cacophony” that Jacob Hacker describes, the notion that there ever even was a welfare state, beyond specific policies in specific places at specific times, becomes suspect, and so too does its defence. As austerity forces generalize and as states unload social responsibilities onto less powerful actors, it is important to recall the context in which welfare states were wrought and the aspirations to which they gave an institutional form. This essay will contribute to such a program by attempting to locate the “welfare moment” in the history of the state’s formation. This moment occurred sometime between the onset of the Great Depression and the aftermath of the Second World War to varying degrees across the planet, though we will mainly focus on the North Atlantic. It was a time of great opportunity for social justice, in which political formations of all colours were forced to include social measures in their programs or risk becoming irrelevant. Where social forces were able to seize that opportunity, they helped implement institutions which, though they have been under attack in recent decades, still perpetuate a legacy inherited from that time."

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research paper welfare state

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The welfare state is a set of government programs aimed at ensuring citizens’ welfare in the face of the contingencies of life in modern, individualized, industrialized society. All welfare states provide direct state assistance to the poor in cash (e.g., social assistance) and in kind (e.g., housing and social services), as well as social insurance against the financial consequences of certain biological risks (illness, incapacity to work, childbirth, child-rearing, old age) and occupational risks (unemployment, accident, or injury). Whereas social assistance—in the United States popularly termed welfare—entails redistribution from the non-poor to the poor, social insurance rarely does so and instead can be understood primarily as redistribution across the individual life course, from periods of employment to periods of inability to work. (Prominent exceptions would be the U.S. public pension system, Social Security, and the German social health insurance scheme, both of which are moderately redistributive across classes.) Usually, this latter type of social protection is available only to persons who have been employed and hence contributed to the relevant social insurance scheme.

In most welfare states, substantial efforts are also made to mitigate socioeconomic inequalities in primary income distribution through secondary redistribution, that is, government spending on social programs funded by progressive income taxation together with tax expenditures (tax deductions for social-insurance or charity contributions, as well as negative income taxation for the working poor). Historically, such reductions in socioeconomic inequality have been pursued to achieve four objectives: (1) to reduce the costs of production for employers, especially through unemployment, health, and pension schemes; (2) to maintain social peace, that is, to forestall both radical unionism within the factory, primarily via accident insurance, as well as threats to private property from leftist or rightist political radicalism in society as a whole; (3) to secure equality of economic opportunity, seen as conducive both to social peace and to economic growth; and (4) to enrich the status of citizenship beyond civil and political equality by including a social dimension, as articulated by T. H. Marshall in 1950. Countries pursuing this goal of social citizenship—with the exception of the United States, virtually all members of the Organization for Economic Cooperation and Development (OECD)—consider equally funded and free public education to be an essential component of their pursuit of equality of opportunity and hence of their welfare state in a broader sense.

Welfare Regimes

Beyond these shared traits, welfare states differ in many dimensions. Early classification schemes of the 1960s and 1970s, such as that of Harold Wilensky, ranked welfare states in linear fashion according to their “generosity” measured in only one dimension, aggregate spending levels. In 1990 G0sta Esping-Andersen’s groundbreaking book The Three Worlds of Welfare Capitalism proposed a new typology based on essential differences among welfare states that are not quantitative but qualitative. He preferred the term welfare regime, which focuses the analysis on the patterns of interaction of institutions governing primary and secondary distribution in the context of a nation’s historically rooted political economy, to the term welfare state, which is typically viewed as working against or independent of market forces. First, welfare regimes differ according to their degree of “decommodification,” or “the degree to which individuals and families can uphold a socially acceptable standard of living independently of market participation” (p. 37); this dimension includes not only the benefit levels but also the eligibility terms and coverage levels of a country’s social welfare schemes. Second, welfare regimes differ in terms of their impact on social stratification, that is, their degree of redistribution, poverty reduction, and income equalization. Finally, they differ based on the priority given to the role of the state, market, and family respectively in protecting against welfare risks. Esping-Andersen’s widely accepted typology distinguishes among three types of welfare regimes: liberal (e.g., the United Kingdom, the United States, Australia), social-democratic (e.g., Sweden, Norway, the Netherlands), or corporatist (e.g., Germany, Austria, Italy). Not only Esping-Andersen but also subsequent research on the “varieties of capitalism” by Peter Hall and David Soskice (2001) have demonstrated that a country’s system of social protection forms an integral part of its political economy; thus a leading field of contemporary welfare research takes this holistic regime perspective, looking for institutional elective affinities between a country’s variety of capitalism (“liberal,” “coordinated,” etc. [Hall and Soskice 2001]) and variety of welfare regime (e.g., Ebbinghaus and Manow 2001).

Liberal Regimes Of the three types of welfare regime, the liberal regimes redistributes income the least. Countries of this type provide minimum benefits to the poor and devote most of their expenditure to social-insurance schemes focused on the middle classes. The public schemes are not intended to be the beneficiaries’ sole source of income in time of need, but instead to be a “safety net,” or one pillar beside the second and third pillars of occupational plans and individual savings. In the liberal welfare world, individual performance in the market is considered to be the primary source of welfare, hence generous tax expenditures subsidize employee benefits and individual savings accounts in the pension and health areas. Citizens’ welfare is commodified: they have weak or no constitutionally inscribed social rights, and high levels of socioeconomic inequality are tolerated. Citizens’ welfare is best guaranteed, in the liberal world-view, through economic growth and opportunity rather than state provision; this is best achieved when minimal state taxation of private wealth fosters maximum investment and when minimal state benefits foster maximum self-reliance. Particularly in the United States, the more generous welfare states of Western Europe are viewed more as hammocks than safety nets, whereas the U.S. social net is seen by most Europeans as a sieve.

Conservative Regimes Conservative welfare regimes redistribute moderately, having as their main goals the preservation of social status achieved in the labor market and the realization of social citizenship rights. They provide equally funded and free public education, moderate benefits to the poor, and generous social-insurance schemes for employed persons, in which benefits are linked to contributions and both are linked to the income level attained. In the conservative welfare world, the family is considered to be the primary source of welfare. Hence both the tax system and social-insurance benefits are designed to support the family breadwinner.

Social-Democratic Regimes Social-democratic welfare regimes redistribute extensively and are by far the most successful in achieving long-term reductions in socioeconomic inequality, particularly across generations, as Walter Korpi and Joakim Palme demonstrate in their 1998 study. These regimes integrate antipoverty and social insurance programs in schemes open to all citizens. The schemes are designed to achieve decommodification, that is, to grant social citizenship—the right of meaningful participation in social life—independent of employment status. The state is responsible for achieving a considerable degree of distributional equality.

Although Esping-Andersen’s typology still prevails in welfare state (or welfare regime) research, it has been criticized for overlooking certain dimensions. First, Ilona Ostner and Jane Lewis (1995) have pointed out that this hegemonic typology fails to account for gender discrimination in welfare states, most of which were based on the now-outdated male breadwinner model. Ann Orloff (1993) has developed a new welfare state typology based on the criterion of whether welfare states reinforce the traditional family system and women’s inferior labor-force position or promote new, equal roles for both sexes. Second, in comparing Esping-Andersen’s ideal-types to specific national experiences, many scholars have found the typology to be based too narrowly on the experiences of Britain, Germany, and Sweden and only partially applicable to other countries. In addition to ongoing debates about the classification of individual countries such as France, Ireland, or the Netherlands within Esping-Andersen’s scheme, scholars have proposed supplementary ideal-types: Francis Castles and Castles and Deborah Mitchell (1993) distinguish an “antipodean” “wage-earners” welfare regime in Australia and New Zealand characterized by minimum wage legislation, compulsory arbitration and a protectionist consensus; Maurizio Ferrera (1996) and Giuliano Bonoli (1997) contend that a distinct Latin rim welfare regime (resembling the conservative one) exists in Italy, Spain, and Greece, where family and informal networks are important suppliers of welfare; Bob Deacon (2000), Nick Manning (2004), and Jolanta Aidukaite (2004) have documented the emergence of a postsocialist welfare regime (resembling the liberal one) in eastern Europe; and finally, some, such as Catherine Jones (1993) and Elmar Rieger and Stephan Leibfried (2003), have investigated and posited the existence of East Asian welfare regimes, based on “Confucian” values.

Historical Origins

As the “logic of industrialization” school correctly observes, the historical origins of welfare state development lie in the consequences of the Industrial Revolution and attendant societal modernization—specifically, urbanization, industrialization, and economic liberalization—in the mid- to late nineteenth century. As Ferdinand Tonnies (2001) explains, these developments uprooted western Europe’s inhabitants from premodern, static communities that had provided for mutualist social protection through the family, community, parish, feudal lord or guild, and thrust them into an individualized, comparatively anonymous urban society in which the satisfaction of basic needs was commodified, that is, had to be purchased with wages from employment. In the early decades of this societal modernization (from the late nineteenth century through World War I [1914-1918]), social unrest, epidemics, slum formation, violent labor conflicts, and radical political movements were rampant. Initially, bourgeois philanthropic associations attempted to mitigate this malaise but within a few decades realized they were overwhelmed. At the same time, the working classes’ sacrifice and service to their states as soldiers in the two world wars earned them sociopolitical recognition and rights in many European countries.

As Walter Korpi (1983, 1993) among others have noted, three factors converged to move political coalitions of bourgeois and working-class parties across Europe to grant workers social and political rights and institute generous welfare-state programs during the period 1918-1949: (1) workers’ newly won political power, organized in Social-Democratic and Labor parties and in some places accompanied by popular uprisings; (2) bourgeois elites’ fear of the political radicalization of impoverished workers as had occurred in the revolutions in Russia (the Soviet Revolution of 1917) and Germany (Adolph Hitler’s ascent to power in 1933)—a fear exacerbated by the Great Depression of 1929 to 1939 and by the witnessing of Hitler’s destruction of the Continent during the five years thereafter; and (3) strong national identities in newly unified nation states, forged and strengthened in the two world wars. Benjamin Veghte (2004) notes that in the United States, where the first two factors were largely absent, the working-class movement was much weaker and unable to achieve social citizenship rights for a variety of reasons. An ambitious welfare state (the New Deal) was introduced during this period, in 1935, but not based on social rights; rather, it largely excluded most of the poor population, such as agricultural workers and southern African Americans. Theda Skocpol’s research (1990) has revealed that the New Deal welfare state was not completely new, but rather followed in the footsteps of a generous Civil War pensions scheme that served millions of beneficiaries (Skocpol 1996). In Britain the Beveridge Report of 1942 highlighted the need for a welfare state to avoid the breakdown of society in the postwar period, and this became the blueprint for the welfare state introduced in postwar Britain.

Public-Private Mix

As noted above, prior to the formation of the modern nation-state, most types of social welfare were provided by collective, private forms of provision such as those offered by feudal hierarchies, guilds, and the church. In the course of urbanization, societal modernization, and the ascendance of liberal political and economic ideology since the late eighteenth century, free-market individualism under-minded these traditional collectivist forms of private welfare provision, creating the modern “social question.” After the mid-nineteenth century, modern collectivist private welfare solutions such as solidaristic union/professional initiatives as well as bourgeois or church-based charitable ventures filled the vacuum, followed by welfare state initiatives from the 1880s in Germany, Belgium, and—since World War I—in most other western nations. In most Western countries, then, since the mid-twentieth century the welfare state has been the primary instrument of welfare provision.

This has not been the case in many non-Western countries, however, nor in several liberal welfare regimes, most notably the United States. Interestingly, most countries with weak welfare states evince high rates of religiosity and associated church-based welfare provision and religiously inspired philanthropy. As Leibfried and Mau note,The history of religiosity in European and other countries which developed strong welfare states shows that the need for religious reassurance in one’s social existence has become less pressing when greater security is provided by the secular institutions of public policy. In other parts of the world, however, where state power has remained weak, the social institutions of religions—for example Islamic charities in Arabic countries, Hinduist castes in India and familial networks in East and Southeast Asia—remained the main provider of social security. (2007, p. xxv)

Secular welfare states may thus be viewed as functional alternatives to religiously inspired and/or organized private welfare provision. Empirically, as Pippa Norris and Ronald Inglehart (2004), and Elmar Rieger (2005) have observed, the revival of evangelical Protestantism in recent decades strongly correlates with the erosion of social security guarantees through the welfare state.

Non-profit, religiously inspired forms of welfare provision are not the only form of private provision to survive and thrive complementarily to and in tension with the modern welfare state. Profit-oriented, market-based provision has done so as well, most strongly in the liberal welfare regimes of Great Britain, Switzerland, the United States, and Australia. These countries were pioneers in private, insurance-based provision, both for individuals and employees. Such welfare provision differs markedly from public provision in both its distributive dynamics (redistributing not across income classes but across the individual life course from economically self-sufficient to risky/dependent life phases) and its financial logic (calculated on actuarial rather than solidarity principles). This realm of social provision, much of which is subsidized by the government in the form of tax deductions (from the government’s perspective: “tax expenditures”), was overlooked in comparative welfare state research until the appearance of Martin Rein and Lee Rainwater’s (1986) pathbreaking analysis of the interplay of public and private welfare provision in OECD countries. Still today, however, most comparative research does not interpret the state-subsidized employee and individual benefits sphere, even though—as Willem Adema (1999, p. 30) and Jacob Hacker (2002, p. 338) have documented—in some countries such as the United States it makes up one-third of (public and private) social spending. Even Esping-Andersen’s (1990) research on the liberal welfare regime type, which theorizes the interaction between the state and the market, overlooks the magnitude and significance of private provision, thus misconstruing the U.S. system as “residual” and “means-tested.” Adema (1998, 1999, 2005) and Hacker (2002) have corrected this misinterpretation, pointing out that if U.S. employee and individual benefits are included in social spending data, the U.S. welfare system evinces a share of GDP roughly equal to the OECD average. The key difference between public (direct) and private (tax expenditure) welfare state expenditure is that the former tends to be redistributive and focus on alleviating poverty, whereas the latter focuses on helping the middle classes provide for their own economically precarious life episodes.

Theories Of Development

In the 1960s and early 1970s, the best comparative work on the welfare state found a country’s prevailing political culture—often termed national values—to be causally significant in shaping its welfare state institutions and their degree of generosity (e.g., Rimlinger 1966, 1971). This ideational approach was displaced in the 1970s by functionalist and modernization theories, most prominently that of a “logic of industrialization” (Wilensky 1975). In light of the universal dissolution of pre-modern mechanisms of social protection—namely, the family, church, feudal hierarchy, guild and local community—all industrializing countries faced similar social problems, and hence developed similar modern instruments to secure a healthy and productive workforce. In this view, differences in welfare state spending levels are attributable not to political-cultural or other qualitative cross-national differences, but to a country’s level of economic development as well as the age structure of its population and degree of maturation of its welfare state. Ultimately, the school claimed, all countries would converge toward an institutionally similar, generous welfare state. Since the 1980s, power-resources as well as polity-centered (and closely related new-institutionalise explanations have proven more convincing. The power-resources approach, articulated by Korpi (1983) and Evelyne Huber and John Stephens (2001), argues that the social and political balance of power between labor and capital has determined the level of spending and in particular the degree of redistributiveness of welfare states. Research on the correlation between the partisan composition of governments and their levels of welfare state expenditure has largely corroborated the power-resources interpretation: Manfred G. Schmidt (1982, 1996), Castles and Herbert Obinger (2007), and indeed recently also Wilensky (2002) himself have found strong statistical evidence that where left-of-center (“social democratic,” “labor” or “democratic”) parties have ruled, levels of government social spending and redistribution have been much higher on average than in cases where right-of-center, free-market-liberal (“liberal,” “conservative,” or “republican”) parties have reigned. This “parties matter” explanation enriches the power-resources interpretation, moreover, by showing that the left-right dichotomy does not explain partisan influence fully: Christian-democratic and center parties, historically common in continental Europe, correlate with moderate social spending, that is, more generous than the free-market-liberal parties and less generous than the leftist parties.

Willem Adema and Maxime Ladaique (2005) have demonstrated that when the tax system and private benefits are also taken into consideration, liberal welfare regime expenditure approximates that of the other two regime types. This suggests that Wilensky’s “logic of industrialization” explanation of welfare state growth was correct, according to which a high level of economic development has driven all Western countries to converge toward a uniform, generous welfare state. Castles and Obinger (2007) rebut Adema and Ladaique, however, arguing that while the much greater private welfare spending of liberal welfare regimes often puts them on a par with conservative and social-democratic welfare regime expenditure, the latter are far more redistributive across income categories, making for a fundamentally different type of welfare state. Regarding the causes of welfare state development, they find that while the levels of economic development and economic growth best explain the increase in overall (public cum private) welfare spending, power resources—measured in terms of partisan incumbency—best explains the growth in the more redistributive, direct state welfare spending.

research paper welfare state

The polity-centered and new-institutionalist approaches adamantly dispute the explanatory power of class. They attribute the scale and type of welfare state expansion and retrenchment to state-structural factors such as the nature of the party system and civil service and the influence of policy intellectuals and reformist associations on these, as in the work of Skocpol (1985); Margaret Weir, Orloff, and Skocpol (1988); and Dietrich Rueschemeyer and Skocpol (1996); the lack of constitutional “veto points,” as in the work of Ellen Immergut (1989) and George Tsebelis (2002); and “feedback effects” of (pre-)existing institutions and policies, as in the work of Paul Pierson (1993).

Both theory and comparative data on public opinion on the welfare state have improved since the 1990s, giving ideational approaches an empirical basis and rendering them worthy of causal reconsideration alongside the power-resources and new-institutionalist explanatory approaches. Indeed, Clem Brooks and Jeff Manza (2006) have found that national social policy preferences exert a strong and measurable influence on welfare state spending as well as on cross-national variation therein, after controlling for other factors such as institutional feedback effects. Mau and Veghte (2007) find strong relationships between welfare regimes and social policy attitudes across OECD countries. Further, Veghte, Greg M. Shaw, and Robert Y. Shapiro (2007) have revealed that social policy preferences and issue prioritizations themselves are contingent and malleable in response to issue framing—for example, of military over social security—by political elites. Given the availability of new transnational datasets on both public opinion and party platforms, more research into public opinion on welfare state issues and its relation to the aforementioned causal factors, and incorporation of this dimension into welfare state theory, can be expected.

Source Of Funding

Scholars used to distinguish between contribution-based (the Bismarckian, German model) and tax-based (the Beveridge, English model) funding of welfare state programs, but in practice these two models have converged, as most social-insurance schemes are funded by a mixture of employer/employee contributions and subsidies from general state revenues. Contribution-based schemes, which are funded and administered independent of the government budget and in which members have vested benefits, have historically tended to be more generous and less susceptible to retrenchment than tax-funded schemes, which legislators can cut back when tax revenues are scarce or an antiwelfare state party comes to power.

Welfare State Critique And Reform

After expanding steadily during the “Golden Age” of welfare-state development in the 1960s and early 1970s, most Euro-American welfare states suffered a critical shock from the oil crises and recession of the mid-1970s and the deindustrialization and high unemployment rates that followed. Not only did these factors deprive the welfare state of its financial bases in both tax revenues and employer/employee contributions, the welfare state itself was widely considered to have contributed to the economic collapse by draining the economy of investment income and burdening it with bureaucratic regulations, as well as undermining individual initiative and the will to work through excessive benefits that fostered dependency. Further, the decline in industrial and the rise in service sector employment, as well as increasing individualization, disintegrated the working classes, which historically had directly or indirectly been the main driving force and constituency of welfare state development in all OECD countries except the United States. Overall, the rapid and sharp rise in the absolute and relative amount of government spending devoted to the welfare state, together with the declining popular support for the latter, led many observers by the mid- to late 1970s to perceive a “crisis of the welfare state” (Flora 1981; Offe 1984). If some degree of retrenchment were not implemented, the welfare state threatened to bring Western economies to a standstill. Conservatives won national elections in Britain (Margaret Thatcher), the United States (Ronald Reagan), and West Germany (Helmut Kohl), in the early 1980s and were reelected in the mid-1980s, all running on anti-welfare-state platforms. Ever since, conservatives in most other OECD countries have tried to scale back welfare-state benefits as well as restrict eligibility to those “truly in need.” This has proven extremely difficult, given that in democratic systems, once citizens and/or interest groups have acquired benefits, they mobilize strongly to retain them. As Pierson observes, “Retrenchment is generally an exercise in blame avoidance rather than ‘credit claiming.’ First, the costs of retrenchment are concentrated, whereas the benefits are not. Second, there is considerable evidence that voters exhibit a ‘negativity bias,’ remembering losses more than gains. As a result, retrenchment initiatives are extremely treacherous” (1994, p. 18). Due to this “conservative welfare function” (Rieger and Leibfried 2003), benefits in most welfare states (with the exceptions of New Zealand and Switzerland) have been scaled back very little in OECD countries despite extended periods of neoliberal governance.

What welfare state reformers have been able to achieve is a tightening of eligibility criteria, moving away from the model of the welfare state as provider of benefits to persons unable to work and toward an activating welfare state that provides an incentive to work by targeting benefits (and/or providing more generous benefits) to persons working or actively seeking employment, while further decreasing the number of inactive citizens by scaling back employment and wage regulation and postponing the retirement age.

Many scholars have also criticized the welfare state for its focus on the male breadwinner and the attendant discriminating effects on social groups long denied equal opportunity in the labor market, such as women, ethnic minorities, and the disabled. Feminist scholars have called attention to the fact that such welfare-state subsidizing of the higher earner (breadwinner) in a family, particularly pronounced in conservative welfare states, reinforces the gendered division of labor within the family. Others have criticized citizenship requirements in many welfare state programs for their discriminatory effects on noncitizens, who are in most cases ethnic minorities.

Trends In The Early Twenty-First Century

The most important developments affecting welfare states are not their internal dynamics but changes in their fiscal, economic, and societal environments. Over the past quarter century, deindustrialization has brought about a dramatic and enduring decline in the proportion of skilled middle-class workers, transforming many of them from employees who pay into the system into long-term unemployment beneficiaries—especially in the conservative welfare regimes of continental Europe, with their generous unemployment schemes.

At the same time as these costs have risen, since the 1990s economic globalization has given new credibility to threats by the owners of capital to leave countries that tax corporations and/or wealthy individuals excessively (Genschel 2005), placing strong external restrictions on the national welfare states to finance themselves through taxation. Further, as Jef van Langendonck (1997), Esping-Andersen (1999), and Peter Taylor-Gooby (2004) have shown, the demographic challenges of population aging and a vast increase in single-parent families have created new social risks which the traditional welfare state—based on the male breadwinner—was not designed to handle. As a result of these developments, most welfare states have experienced a decline in contributions and an increase in demand for benefits, posing a formidable challenge to their sustainability and suggesting the need for welfare state reforms to adapt to these new social conditions.

The main response to this second crisis of the welfare state since the late twentieth century has been privatization. Such privatization entails three principle shifts: first, from publicly guaranteed outcomes to defined contributions; second, from mandatory to voluntary provision against future risks; and third, from the group solidarity to the individual actuarial principle. Such privatization promises to lessen the fiscal burdens incurred by public social insurance schemes for the health and pension needs of the imminently retiring baby boom generation by increasing copayments and restricting eligibility and benefits, while simultaneously offering all individuals the opportunity to save individually for their future security needs via tax-deductible contributions to publicly regulated, individual private pension plans. This should also lessen the burden on corporations posed by the non-wage labor costs entailed in employer and employee contributions to public social-insurance schemes, increasing the international economic competitiveness of Western economies in the era of globalization. The biggest disadvantage of such privatization is that it necessarily entails a shift from universal to partial coverage of the population in need, with a tendency to exclude precisely those who need social protection the most, because they lack the surplus income required to voluntarily save for their and their families’ future risks. Finally, corporations, which have long provided tax-deductible employee benefit plans to their employees, have moved from defined benefit to defined contribution plans, i.e. from occupational pension plans which guaranteed a specific payout in retirement based on a formula for years of service and salary earned, to plans which collect employer and employee contributions in interest-bearing individual retirement accounts which are transferable from one job to the next, but may or may not suffice to meet—in combination with one’s public pension—a person’s retirement needs.

A final challenge to the welfare state at the outset of the twenty-first century is posed by immigration. As Wim van Oorschot (2000), Michael Bommes and Andrew Geddes (2000), Carsten Ullrich (2002), Knut Halvorsen (2007), and van Oorschot and Wilfred Uunk (2007) have shown, national solidarity communities that long provided the normative foundation for European welfare states are now being threatened by real and/or perceived increases in ethnic/national heterogeneity, as evidenced by political debates throughout western Europe in the first decade of the century. Regarding the United States, Korpi (1983), Martin Gilens (1999), and Veghte (2004) have argued that racial, ethnic and religious heterogeneity have always limited development of a solidarity community and hence a redistributive welfare state. Now, scholars such as Alberto Alesina and Edward L. Glaeser (2004) are asking if, as citizens increasingly tend to distinguish between “we” and “they,” the welfare consensus and commitment to publicly institutionalized solidarity in western Europe is still sustainable. Keith Banting and Will Kymlicka (2004) have determined, however, that clear evidence of a negative association between the influx of migrants and support for the welfare state is lacking. The structure of countries’ political institutions mediates and conditions the effects of immigration on welfare state development, and at the cross-national level other factors are likely more decisive. Nevertheless, as Leibfried and Mau (2007) observe, politicians may use ethnic and sociocultural divisions within a society to position themselves in public debates about distributional conflicts, leading to restrictive effects on welfare state policies.

While the threats from increasing immigration seem formidable, most welfare states are showing signs of successful adaptation to the challenges posed by economic globalization. Comparative research by Fritz Scharpf and Vivien Schmidt (2000) on the effects of globalization on Western welfare state development has revealed that welfare regimes differ in their capacity to adjust to the fiscal and competitiveness constraints constituted by increasing global product and capital market integration. Social-Democratic and liberal welfare regimes in Scandinavian and Anglo-American countries respectively, though fundamentally different, have proven better suited to successful adaptation to the challenges of economic globalization than have the conservative welfare regimes of continental Europe.

Moreover, Elmar Rieger and Stephan Leibfried (2003) argue convincingly that strong welfare states will not only survive the era of globalization, but have themselves historically paved the way for it. Since World War II (1939-1945) and continuing under conditions of intensified economic globalization since the 1990s, strong welfare states have provided political leverage in capitalist democracies such as Germany for leaders to embrace exposure to the risks of international competition in foreign economic policy, whereas countries with weak welfare states such as the United States have tended toward protectionism. As Sven Steinmo (2002) has shown, the Swedish case in particular demonstrates that a generous welfare state, with some recalibration over the past decade, can co-exist over the long term with a thriving, open and internationally competitive national economy.

A half century ago, one of the fathers of modern social policy, the Swedish Nobel prize-winning economist Gunnar Myrdal (1898-1987) argued that a transition from the welfare state to a “welfare world” would eventually transpire. Today, a budding field of welfare state research—pioneered by Deacon, Michelle Hulse, and Paul Stubbs (1997); Nicola Yeates (2002); Lutz Leisering (2004); and John Meyer (2004); and pursued in the journal, Global Social Policy (launched in 2001)—traces the emergence of “global social policies” emanating from supranational and global nongovernmental organizations and governmental institutions such as the ILO, World Bank, World Trade Organization, or United Nations. At the crossroads of the “world society,” international relations, welfare state and area studies literatures, this research examines how welfare concepts, programs, and models are becoming globalized.

Many eminent welfare state scholars, however, such as Abram de Swaan (1997), Claus Offe (2003), Fritz Scharpf (1999, 2002), and Wolfgang Streeck (1995, 2000), are skeptical concerning the prospects of transnational social policy. Historically, as Stein Rokkan elaborated in his seminal 1974 essay, welfare states have developed in the wake of processes of state-building, nation-building, and democratization, that is, in democratic nation-states. This process took several centuries to evolve and was a rocky road paved by multiple wars and, in many countries, revolutions. Transnational social policy is unlikely to develop until something equivalent to the public sphere and solidarity community of the nation-state evolves on the transnational level, that is, a shared willingness to redistribute income across national boundaries.

The closest thing to such a transnational polity and solidarity community on the horizon is the European Union, formerly the European Community. For the first four decades of its existence, the European Community pursued economic integration without political or social integration. Since the last decade of the twentieth century, however, the European Union is slowly but discernibly moving toward such political and social integration, yet, as Franz-Xaver Kaufmann (2001) has noted, continues to evince a strong reticence with regard to all issues of interpersonal income redistribution. Leibfried (2005) and Obinger, Leibfried, and Castles (2005) observe that rather than employing centrally administered, mandatory, redistributive “hard” social policies, as national welfare states had done, the European Union has relied thus far on courts and markets and on “soft policy,” that is, governance measures with which compliance is not enforced by legal sanctions, but simply encouraged through the “open method of coordination.” As Leibfried and Mau (2007) have observed, beyond its borders Europe is the leading advocate of transnational social policy as propagated by global institutions such as the WTO, the WHO, and ILO, and may one day serve as an organizational model inspiring for example the NAFTA, MERCOSUR and ASEAN countries to pursue transnational social policies in their respective regions. The debates on the evolution of European social policy can be followed above all in the Journal of European Social Policy (since 1991) and increasingly in the Journal of European Public Policy (since 1994), which explores the interaction between central and nation-state social policy in the European Union.

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Welfare is the result of an expanding production of care, financial benefits, or other services for ensuring the material and cultural conditions for the reproduction of humans as biological beings, as economic producers and members of a work force, and as social beings and citizens (the conditions of integration in society and of social cohesion). These functions for satisfying a set of needs are performed through various informal or institutionalized arrangements (ranging from family support to public assistance and social insurance funds) and by various types of actors (families, employers, nonprofit organizations, public administrations, etc.).

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By identifying the present-day producers of welfare, the first part of this research paper will show that what we now commonly call the welfare state represents a combination of the factors of production of welfare, wherein the state plays a major but not exclusive role. The second part will describe the combinations corresponding to different types of welfare states. Finally, recent trends in welfare and reforms thereof in response to the ‘crisis of the welfare state’ will be examined.

1. The Producers Of Welfare

There are three major producers of welfare: civil society, the market, and the state. Depending on its history, level of economic development, and political and social structures, each country has worked out its ‘mode’ of welfare production, characterized by a particular combination of these three pillars in what has been called the ‘welfare triangle.’

1.1 Society

Forms of solidarity based on belonging to a neighborhood, community, or family represented the first means of social protection and care for individuals, before state institutions replaced face-to-face solidarity with public welfare systems. The family and nonprofit organizations, in particular, are major producers of welfare in civil society.

1.1.1 The Family. The family used to be the major supplier of welfare to individuals. But even in welfare states, it remains an influential producer of welfare, supplying as it does much of the food, housing, education, and care to children and the elderly. These unremunerated activities performed by families—and mainly by women—have always represented a basic guarantee for the individual against the contingencies of life. When old-age pension funds did not exist and the person had neither an inheritance nor an estate, the best guarantee for old age was to have many children who could later satisfy the basic needs of their aging parents, when the latter would no longer be fit to work. Family care, a fundamental sort of welfare in preindustrial societies, was also one of the preconditions for the development of wage labor: ‘Participation in wage labor presupposes a support-system of unwaged labor outside the labor market’ (TaylorGooby 1991, p. 100).

Even though the modern welfare state has assumed many of the family’s traditional roles (especially in providing income support, education, and care to the young and old), the family still produces welfare. During the 1980s and 1990s, the spread of joblessness and the aging of the population have increased its role. For one thing, unemployed young people live longer with their parents. For another, governments have, given the increasing number of dependent older persons, encouraged families to increase their help and care for aging parents—the intention being to curb the growth in public expenditures devoted to caring for the elderly. In families with four generations, two of them in retirement, young retirees quite often have to handle the needs of both their unemployed adult children and their dependent elderly parents. However, the family’s role as a producer of welfare varies from one type of welfare state to another. Since welfare in southern Europe, for example, tends to be organized along the lines of providing monetary benefits, families there have to make up for the lack of adequate services.

1.1.2 Nonprofit Organizations. Nonprofit organizations are important producers of welfare, even in developed welfare states. The friendly or mutual aid societies of the past were the harbingers of the public social security systems of our times. At present, nonprofit organizations cooperate closely with the state in order to produce welfare. In many continental European countries, the state provides financing, and nonprofit organizations deliver services. In Germany for instance, most of the assistance provided to families and the elderly comes through federations of nonprofit organizations. The same holds for France. Nor should we set the nonprofit sector at odds with the marketplace. Many for-and non-profit hybrids have come into being. In France for example, certain home services for the elderly are provided through associations, which take the elderly’s place as an employer of home helpers and bill them the costs.

1.2 The Market

In the welfare vacuum in the early nineteenth century, security and well-being depended on one’s estate, on one’s status as property-owner. The person who owns ‘a capital or an estate thus has insurance whereas those who own nothing depend on others in case of need’ (Hatzfeld 1989, p. 27). At the turn of the twentieth century, a new type of security arose, based on social law (mainly labor law) instead of property rights. It served as the foundation for social insurance and social security systems.

On the periphery of these national welfare systems, the market continues, through private insurance funds and for-profit social services, satisfying part of the population’s welfare needs. Several national welfare systems allow for public as well as private, for-profit activities. Such is the case for health in France and Germany, and for education in the United Kingdom.

Since the 1980s, ‘neoliberal’ supporters of free enterprise have advocated fully or partly privatizing social insurance and, in particular, retirement funds (World Bank 1994). However, privatization risks splitting the population in two: those who have the means of contracting out to a private insurance policy and those who will depend on public assistance for minimal support.

Companies, too, produce welfare for their employees. To provide employees with (supplementary) health or pension benefits, they usually turn to the marketplace and private insurance funds. When such benefits are provided under collective agreements, representatives of labor and employer organizations run the programs. This happens in the countries described as ‘neocorporatist’ (Germany, France and The Netherlands). In some countries, such as the United States or Japan, company programs provide basic access to welfare. The phrase ‘corporate welfare’ has been used to describe the Japanese system.

1.3 The State

Before the late nineteenth century, the state primarily intervened in society in order to maintain law and order rather than to provide social security for all. It played the role of a police on the periphery of the ‘self-regulating’ marketplace (Polanyi 1944). Public assistance was, in the main, repressive.

Modern welfare states have arisen out of the massive industrialization and urbanization trends, and their consequences for the emerging working class. Working class poverty motivated increasing state interventions in social policy. As wage-earning developed, more and more people had a single source of income: the sale of their labor in the marketplace. Whenever their strength failed, when illness, joblessness or old age felled them, their lives plunged into insecurity. In this context, security could no longer depend on owning property or on individual responsibility. It would be linked to the labor law and the status of wage-earner. As sociohistorical studies have established, the welfare state was built up on a new linkage, characteristic of ‘wage-earning society,’ between the dependent status as wage-earner and an extensive system of protection against risks (Castel 1995). Wageearning employment and social security formed a system. The state would regulate it and vouchsafe the wage-earners’ new ‘social rights.’ Through its legislative and regulatory interventions, the state gradually made insurance for covering the risks of health and old age compulsory for employers and their employees; and it organized social protection.

As Ewald (1986) has shown, the technique of insurance led to a new conception of responsibility and risk, which has served as the foundation for the development of the welfare state. This conception broke with the liberal doctrine of individual responsibility and fault; and insurance offered a way out of the blind alley of paternalistic company-run welfare policies. It has thus become possible to avoid the quest to find a fault and the party causing it. The insurance technique replaces this quest with the question of how to collectively share the costs of risks. It has served as the basis for another conception of security in industry, and introduced a new rationality and a different paradigm of risk and security. On this basis, welfare states would develop after World War II. The welfare state represented a social pact between wageearners and employers, a pact backed by the state and, to a large degree, organized by it in various ways from country to country.

Modern welfare states guarantee a comprehensive set of social rights to all citizens. These rights have thus become a major part of citizenship. This universality differentiates contemporary welfare from the social laws of earlier times, which mainly targeted the poor or the working class. According to Briggs (1961), the welfare state modifies the interplay between forces in the marketplace in three main ways. First of all, it guarantees a minimum income to individuals and families. Second, it reduces insecurity by enabling individuals and families to cope with the risks related to illness, old age, unemployment, and disability. Third, it guarantees all citizens, regardless of class or social status, access to certain standard of social services and facilities. As a consequence, the idea of the welfare state centers around this reference to the necessity of counterbalancing the market economy’s negative effects. For this reason, ‘decommodification’ was one of the principal indicators used by Esping-Andersen (1990) to draw up a classification of ‘welfare regimes’ that is now solidly established in the literature.

2. Three Types Of Welfare Regimes

Initially, comparative research on welfare resorted to a single model of the welfare state, under which one quantity was used to measure the contribution to welfare, namely public expenditures on it. Countries were thus classified on a scale based on these expenditures. This sort of approach to understanding the welfare state led to the ‘industrialization’ or ‘convergence’ thesis (Wilensky 1975), which maintained that the major determinant underlying the development of the welfare state is economic growth, with its bureaucratic and demographic implications. Accordingly, the degree of welfare in a country was causally linked to the level of economic development there. This implied that all developed countries would gradually converge toward similar social security programs. This single-minded ‘developmentalist’ view of progress proved unable to account for the diversity and specific characteristics of welfare programs in different countries, and even less able to explain the timing of the introduction of such programs. Reducing all forms of public interventions to the single quantity of expenditures on welfare does not enable us to understand the specific ways that, from country to country, the state itself has been built up through close interactions with civil society (Rosanvallon 1990). As it turned out, the same level of expenditures might correspond to considerable differences in welfare states, in both their objectives and forms of organization. For these reasons, it was necessary to identify and analyze different types of institutional models of the welfare state.

The typology of welfare states worked out by EspingAndersen (1990) has replaced the foregoing approach. This scholar identified ‘three worlds of welfare capitalism’—social democratic, conservative-corporativist, and liberal or residual—a typology based on three criteria:

(a) the level which the system has reached in ‘decommodifying’ needs, i.e., the degree to which individuals or families can maintain a socially acceptable standard of living, independent of their participation in the market;

(b) the system’s impact on social stratification;

(c) the relationship between state, market, and family.

The social democratic welfare state, typical of Scandinavia, is the most ‘universalist’ of the three systems. It offers not just a high level of protection against risks, but also a good supply of services. This type of system ranks highest on the scale of decommodification, since its extensive ‘social rights’ grant individuals the most freedom from dependency on the market. Under this model, taxes serve to cover the costs of social services and benefits. The main aim is an equal redistribution of wealth. Hence, this type of system has a unifying effect on social stratification.

The conservative-corporativist welfare state is based on the wage-earning relationship. Benefits and services are granted as a function of one’s occupational category. The aim is not to redistribute wealth but to partly replace wage-earners’ income so as to maintain their status when they are at risk. This sort of system is financed not through taxes but through payroll contributions. Despite its generous benefits, it ranks lower on the scale of decommodification than the social democratic welfare state. Eligibility for benefits de- pends on access to the labor market and maintenance in the wage-earning status. When employment difficulties crop up, whole groups of young people, women, etc., lose their eligibility and fall back into the safety net of public assistance. Usually found in continental Europe outside Scandinavia, this type of system sometimes goes under the name of ‘continental welfare state.’

The liberal or residual welfare system assigns the most weight to the market economy and the least to the state. As a consequence, it ranks lowest on the decommodification scale. The state intervenes only as a last resort, and it serves mostly means-tested benefits tied to the person’s income. Very limited welfare is provided with the intention of favoring the person’s return to the labor market. In terms of social stratification, this system causes intense inequality between those who can take out private insurance and those who have to live on fixed, restricted allocations, and who are often stigmatized for receiving them. The United States of America is frequently mentioned as resembling, in many ways, this type of system.

As we can see, each of these welfare systems corresponds to a particular combination of welfare producers. Each combination of the three pillars— civil society, the market, and the state—in the welfare triangle represents a specific system of social protection. This combination cannot be reduced to state interventionism; instead, it assigns the state a degree of influence that varies along with that of the other two pillars of the welfare state.

3. The Challenge: Reforming Welfare States

Since the late 1970s, fierce criticism has increasingly been voiced about the crisis of contemporary welfare states. So far, however, reforms have met with strong institutional inertia. Most systems of social protection still have much the same structure as when they were set up four or five decades ago. The crisis of the welfare state was, at first, diagnosed in terms of the fact that all demands for welfare have gradually converged on the state, which, thus overburdened, has proven ineffective or even inefficient.

Several proposals of various sorts have been made for reforming the welfare state in line with this diagnosis. One sort seeks to reduce radically the state’s role; the actions of Thatcher in Great Britain and of Reagan in the United States have been interpreted in terms of this ‘retrenchment’ (Pierson 1994), as the state withdraws from welfare to the profit of the market. The supporters of another sort of reform have argued for ‘re-embedding’ solidarity in society (Rosanvallon 2000), so as to readjust the state’s role by reinforcing the pillar of society in the welfare triangle, whence the idea of a ‘welfare mix.’ Rein and Rainwater (1986) have argued that the welfare state is too narrow a framework to cope with details about the economic well-being of individuals in a society. Accordingly, reforms must reckon with all the producers of welfare, and with how they form new combinations in the welfare triangle.

From a similar perspective, current thought about coping with the crisis of European welfare states has taken as a starting point the specific institutional arrangements in each country (Bonoli and Palier 2000). ‘Each of Europe’s welfare regimes confronts a different set of adjustment problems depending on their particular characteristics and thus differs in their paths to reform’ (Ferrera et al. 2000, p. 431). For instance, the conservative-corporativist type of welfare system tends to be caught up in the vicious circle of ‘welfare without work’ (Esping-Andersen 1996). This syndrome incapacitates the system from dealing with the challenge of an aging population and its consequences for old-age pension funds. Such welfare states have usually implemented generous schemes for allowing wage-earners to withdraw from the labor market well before the age of retirement. They have thus favored the emergence of an ‘early exit culture’ that makes it impossible for pension reform to work. For this type of system, improving the ratio of the actively working to the retired population entails shifting from passive income support to active job policies for targeting aging wage-earners so as to maintain their employability and keep them in the work force (Guillemard 2001).

In conclusion, as this example shows, although European welfare states face the same challenges (in particular, demographic aging), they have to adopt reforms as a function of their particular problems. Imaginative solutions have to be tailored to the specific situation. They will come out of a complex process that cannot be reduced to a single procedure.

Bibliography:

  • Bonoli G, Palier B 2000 How do welfare states change? Institutions and their impact on the politics of welfare state reform in Western Europe. European Review 8(3): 333–52
  • Briggs A 1961 The welfare state in historical perspective. Archives Europeennes de Sociologie 2: 221–58
  • Castel R 1995 Les Metamorphoses de la Question Sociale. Fayard, Paris
  • Esping-Andersen G 1990 The Three Worlds of Welfare Capitalism. Polity Press, Cambridge, UK
  • Esping-Andersen G 1996 Welfare without work: The impasse of labour shedding and familialism in continental European social policy. In: Esping-Andersen G (ed.) Welfare States in Transition. Sage, London
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  • Hatzfeld H 1989 Du Pauperisme a la Securite Sociale. Presses Universitaires de Nancy, Nancy, France
  • Guillemard A M 2001 Continental welfare states in Europe confronted with the end-of-career inactivity trap. Working Papers Series. Center for European Studies, Harvard University, Cambridge, MA
  • Pierson P 1994 Dismantling the Welfare State? Reagan, Thatcher and the Politics of Retrenchment. Cambridge University Press, Cambridge, UK
  • Polanyi K 1944 The Great Transformation. Rhinehart, New York
  • Rein M, Rainwater L 1986 Public Private Interplay in Social Protection: A Comparative Study. Sharpe Inc., New York
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    Alexander Pacek and Benjamin Freeman in their research article ‚The Welfare State and Quality of Life‛ present a comprehensive view about a welfare state and its impact on the life of people in normal times. The Paper contemplates that while there ... The Paper has made an attempt to present such an appraisal, using the extent to which ...

  20. Welfare State Research Paper

    This sample Welfare State Research Paper is published for educational and informational purposes only. If you need help writing your assignment, please use our research paper writing service and buy a paper on any topic at affordable price. Also check our tips on how to write a research paper, see the lists of research paper topics, and browse research paper examples.

  21. History of Welfare State Research Paper

    According to Asa Briggs, 'A welfare state is a state in which organized power is deliberately used (through politics and administration) in an effort to modify the play of market forces in at least three directions—first by guaranteeing individuals and families a minimum of income irrespective of the market value of their work or their property; s...

  22. Geography of Welfare State Research Paper

    1. Forms And Functions Of The Welfare State The term 'the welfare state' is really a misnomer, as welfare states may take a variety of forms, and these forms have important implications for the citizens, communities, and economies of countries.

  23. Declining Clientelism of Welfare Benefits? Targeting and Political

    It has been argued that since 2014, under the BJP-led central government, welfare benefits in India have become better targeted and less prone to clientelistic control by state and local governments. Arguably this has helped to increase the vote share of the BJP vis-a-vis regional parties. We test ...

  24. Welfare Research Paper

    Journal of European Social Policy 1 (2): 93-105. Wilensky H 1975 The Welfare State and Equality. University of California Press, Berkeley, CA. World Bank 1994 Adverting the Old Age Crisis: Policies to Protect the Old and Promote Growth. Oxford University Press, Oxford, UK. Weight Regulation Research Paper.