The Economics of the Welfare State

Transcription

1 The Economics of the Welfare State Third edition NICHOLAS BARR Oxford University Press

2 CONTENTS List of figures xxiii List of tables xxiv Abbreviations xxv PART1. CONCEPTS 1. Introduction 3 2. The historical background Political theory: Social justice and the state Economic theory 1: State intervention Economic theory 2: Insurance Problems of definition and measurement 129 PART 2. CASH BENEFITS 7. Financing the welfare state,./ 167 hf 8. Contributory benefits 1: Unemployment, sickness, and disability Contributory benefits 2: Retirement pensions Non-contributory benefits Strategies for reform 254 PART 3. BENEFITS IN KIND 12. Health and health care Education Housing 362

3 Contents PART 4. EPILOGUE 15. Conclusion 403 References 416 Glossary 447 Author index 455 Subject index 461 XIV

4 DETAILED CONTENTS List of figures List of tables Abbreviations xxiii xxiv xxv PART1. CONCEPTS 1. Introduction 1. The approach The central argument Organization of the book 5 2. The welfare state and its objectives Defining the welfare state The objectives of the welfare state 9 3. A changing world: Challenges and responses 12 Further reading The historical background. $ 15 if 1. Early days ' Poor relief Other early social legislation The Liberal reforms The origins of the reforms The new measures The First World War and the inter-war period in the UK Housing Unemployment insurance Inter-war poverty relief in the USA The roots of the 'New Deal' The Social Security Act

5 5. The Second World War and its aftermath Wartime activity Policies Post-war developments in the UK and USA The UK The USA Comparative issues Concluding issues: From the past to the present Interpreting the forces creating the welfare state What was created? 42 Further reading Political theory: Social justice and the state Theories of society Libertarian views Liberal theories of society Utilitarianism Rawls on social justice Collectivist views Democratic socialism Marxists 56 yj 5. Implications for the role of the state! # Theoretical issues Policy implications Attitudes towards the welfare state 61 Further reading 64 Appendix: Non-technical summary of Chapter Economic theory 1: State intervention The formal structure of the problem Why economic efficiency is one of the aims of policy The concept of economic efficiency The relevance of efficiency to different theories of society 73 XVI

6 3. Intervention for reasons of efficiency Types of intervention The assumptions under which markets are efficient Policy implications Intervention for reasons of social justice Why does redistribution occur? Should redistribution be in cash or kind? Horizontal equity Is there enough redistribution? Public choice and government failure From theory towards policy: The issue of privatization Conclusion: Economic and political theory Drawing the borderlines between government and markets Achieving policy aims: A liberal view The debate with libertarians 100 Further reading 101 Appendix: Non-technical summary of Chapter Economic theory 2: Insurance Introduction 108 J 2. The demand for insurance tijr Individual demand The nature of the product: Insurance as a mechanism for pooling risk An example: Annuities The supply side The supply of insurance Asymmetric information The insurance market as a whole: Private and social insurance The existence and efficiency of private insurance markets Social insurance 124 Further reading, 126 Appendix: Non-technical summary of Chapter XVII

7 6. Problems of definition and measurement Measuring welfare Individual welfare Social welfare Poverty Defining poverty Poverty and inequality "3\ Measuring poverty Inequality 1: Individuals and families Defining equality and inequality Measuring inequality between individuals Measuring inequality between families Inequality 2: Aggregate measures The descriptive approach Inequality measures based on a social-welfare function Inequality: Some empirical results Conclusion 158 Further reading 159 Appendix: Non-technical summary of Chapter PART 2. CASH BENEFITS J 7. Financing the welfare state *v The structure of the UK government accounts Conceptual issues Government revenue and expenditure Cash benefits Individual national-insurance contributions The National Insurance Fund Benefits in kind Assessing the welfare state Incidence considerations Redistribution: A preliminary discussion " 180 Further reading 182 XVIII

8 8. Contributory benefits 1: Unemployment, sickness, and disability Introduction and institutions The issues Institutions Theoretical arguments for state intervention Efficiency 1: Regulation Efficiency 2: Public provision Social justice Assessment of the national insurance system Efficiency and incentives Equity issues 199 Further reading Contributory benefits 2: Retirement pensions Introduction and institutions Methods of organizing pensions Efficiency arguments for state intervention Public-versus-private provision Funding versus Pay-As-You-Go: Theoretical arguments Social justice Public-versus-private provision,/ The redistributive effects of pensions &J Assessment of national insurance retirement pensions Efficiency and incentives Equity issues Conclusion 230 Further reading Non-contributory benefits Introduction and institutions Theoretical arguments for state intervention Arguments for intervention The simple analytics of targeting 237 XIX

9 3. Assessment of non-contributory benefits Income support Other income-related benefits Child benefit Empirical issues and evidence Conclusion 253 Further reading Strategies for reform Approaches to income support Income-testing: The negative income-tax approach The idea An assessment of large-scale negative income-tax schemes The role of a small-scale negative income tax Indicator-targeting:The'Back-to-Beveridge 1 approach The idea A practical example Mixed strategies Conclusion: Cash benefits 271 Further reading 274 PART 3. BENEFITS IN KIND 12. Health and health care Sr Introduction to benefits in kind Aims Concepts Measuring costs and benefits Methods Theoretical arguments for intervention 1: Efficiency Theoretical arguments for intervention 2: Equity Types of intervention Assessment of the UK system of health care Institutions Assessment 1: Efficiency Assessment 2: Equity 306 XX

10 5. Reform Reform in principle The NHS reforms Conclusion: Health and healthcare 316 Further reading Education Introduction Aims Concepts Measuring costs and benefits Methods Theoretical arguments for intervention 1: Efficiency Theoretical arguments for intervention 2: Equity Types of intervention Assessment of the UK Educational System Institutions Assessment 1: Efficiency Assessment 2: Equity Reform School education,/ Higher education % Conclusion: Education 358 Further reading Housing Introduction Aims Methods ~ The simple theory ofthe housing market Theoretical arguments for intervention 1: Efficiency Theoretical arguments for intervention 2: Equity Types of intervention 373 XXI

11 4. Assessment of UK housing institutions Institutions Problems in individual parts of the housing market Housing as a whole: Tenure neutrality and the distribution of housing Reform The debate over reform Designing a system for a brand new country 394 5,,3. How to get from here to there Conclusion: Housing 398 Further reading 400 PART 4. EPILOGUE 15. Conclusion Arguments for a welfare state Theory Policy Why have a welfare state? A changing world: Debates Is the welfare state desirable? Is the welfare state sustainable? Further reading 415 References ^ 416 Glossary 447 Author index 455 Subject index 461 XXII