Efficiency of the Welfare State

Pierre Pestieau, Claudine Gouyette
Content Type
Working Paper
Institute for European Studies at Cornell University
In general, when the concepts of efficiency and of welfare state are coupled, one first thinks of the effects of the welfare state, notably including the taxes it implies and the benefits it generates, on the efficiency of the economy. This topic has been widely discussed in recent works. One of the main charges addressed to modern welfare states is, indeed, that they would hurt economic performance and international competitiveness. Another charge just as widespread is that they would be inefficient in the provision of social services, and be responsible for the proliferation of transfer programs that are costly and miss their target populations. This charge is thus different from the first one, though not totally unrelated. It concerns the economic efficiency of the welfare state per se, and this is the topic of this paper.
Government, Political Economy