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Is There a Trade-off Between Economic Efficiency and a Generous Welfare State? A Comparison of Best Cases of The Three Worlds of Welfare Capitalism

Headey, Bruce W; Goodin, Robert; Muffels, Ruud J; Dirven, Henk-Jan

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A crucial debate in policy-making as well as academic circles is whether there is a trade-off between economic efficiency and the size/generosity of the welfare state. One way to contribute to this debate is to compare the performance of 'best cases' of different types of state. Arguably, in the decade 1985-94, the US, West Germany and the Netherlands were 'best cases' - best economic performers - in what Esping-Andersen (1990) calls 'the three worlds of welfare capitalism'. The US is a liberal...[Show more]

dc.contributor.authorHeadey, Bruce W
dc.contributor.authorGoodin, Robert
dc.contributor.authorMuffels, Ruud J
dc.contributor.authorDirven, Henk-Jan
dc.date.accessioned2015-12-13T23:15:42Z
dc.identifier.issn0303-8300
dc.identifier.urihttp://hdl.handle.net/1885/89016
dc.description.abstractA crucial debate in policy-making as well as academic circles is whether there is a trade-off between economic efficiency and the size/generosity of the welfare state. One way to contribute to this debate is to compare the performance of 'best cases' of different types of state. Arguably, in the decade 1985-94, the US, West Germany and the Netherlands were 'best cases' - best economic performers - in what Esping-Andersen (1990) calls 'the three worlds of welfare capitalism'. The US is a liberal welfare-capitalist state, West Germany a corporatist state, and the Netherlands is social democratic in its tax-transfer system, although not its labor market policies. These three countries had rates of economic growth per capita as high or higher than other rich countries of their 'type', and the lowest rates of unemployment. At a normative or ideological level the three types of state have the same goals but prioritise them differently. The liberal state prioritises economic growth and efficiency, avoids work disincentives, and targets welfare benefits only to those in greatest need. The corporatist state aims to give priority to social stability, especially household income stability, and social integration. The social democratic welfare state claims high priority for minimising poverty, inequality and unemployment. Using ten years of panel data for each country, we assess indicators of their short (one year), medium (five year) and longer term (ten year) performance in achieving economic and welfare goals. Overall, in this time period, the Netherlands achieved the best performance on the welfare goals to which it gave priority, and equalled the other two states on most of the goals to which they gave priority. This result supports the view that there is no necessary trade-off between economic efficiency and a generous welfare state. The three panel studies are the American Panel Study of Income Dynamics (PSID), the German Socio-Economic Panel (GSOEP) and the Dutch Socio-Economic Panel (SEP). They all have samples of over 15,000 and are the only national panels to have run for ten consecutive years or more, so making it possible to assess the longer term performance of welfare-capitalist states.
dc.publisherKluwer Academic Publishers
dc.sourceSocial Indicators Research
dc.subjectKeywords: capitalism; comparative study; social policy; welfare provision; Germany; Netherlands; United States
dc.titleIs There a Trade-off Between Economic Efficiency and a Generous Welfare State? A Comparison of Best Cases of The Three Worlds of Welfare Capitalism
dc.typeJournal article
local.description.notesImported from ARIES
local.description.refereedYes
local.identifier.citationvolume50
dc.date.issued2000
local.identifier.absfor160603 - Comparative Government and Politics
local.identifier.ariespublicationMigratedxPub18913
local.type.statusPublished Version
local.contributor.affiliationHeadey, Bruce W, University of Melbourne
local.contributor.affiliationGoodin, Robert, College of Arts and Social Sciences, ANU
local.contributor.affiliationMuffels, Ruud J, Tilburg University
local.contributor.affiliationDirven, Henk-Jan, Central Bureau voor de Statistiek
local.description.embargo2037-12-31
local.bibliographicCitation.issue2
local.bibliographicCitation.startpage115
local.bibliographicCitation.lastpage157
local.identifier.doi10.1023/A:1007005619530
dc.date.updated2015-12-12T08:44:44Z
local.identifier.scopusID2-s2.0-0034052260
CollectionsANU Research Publications

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