Abstract
A crucial debate in policy-making as well as academiccircles is whether there is a trade-off betweeneconomic efficiency and the size/generosity of thewelfare state. One way to contribute to this debate isto compare the performance of ‘best cases’ ofdifferent types of state. Arguably, in the decade1985’94, the US, West Germany and the Netherlands were ‘best cases best economic performers’ in whatEsping-Andersen (1990) calls “the three worlds ofwelfare capitalism”. The US is a liberalwelfare-capitalist state, West Germany a corporatiststate, and the Netherlands is social democratic in itstax-transfer system, although not its labor marketpolicies. These three countries had rates of economicgrowth per capita as high or higher than other richcountries of their `type’, and the lowest rates ofunemployment.
At a normative or ideological level the three types ofstate have the same goals but prioritise themdifferently. The liberal state prioritises economicgrowth and efficiency, avoids work disincentives, andtargets welfare benefits only to those in greatestneed. The corporatist state aims to give priority tosocial stability, especially household incomestability, and social integration. The socialdemocratic welfare state claims high priority forminimising poverty, inequality and unemployment.Using ten years of panel data for each country, weassess indicators of their short (one year), medium(five year) and longer term (ten year) performance inachieving economic and welfare goals. Overall, in thistime period, the Netherlands achieved the bestperformance on the welfare goals to which it gavepriority, and equalled the other two states on most ofthe goals to which they gave priority. This resultsupports the view that there is no necessary trade-offbetween economic efficiency and a generous welfarestate.
The three panel studies are the American Panel Studyof Income Dynamics (PSID), the German Socio-EconomicPanel (GSOEP) and the Dutch Socio-Economic Panel(SEP). They all have samples of over 15,000 and arethe only national panels to have run for tenconsecutive years or more, so making it possible toassess the longer term performance ofwelfare-capitalist states.
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Headey, B., Goodin, R.E., Muffels, R. et al. 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’. Social Indicators Research 50, 115–157 (2000). https://doi.org/10.1023/A:1007005619530
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DOI: https://doi.org/10.1023/A:1007005619530