Suchergebnisse

Development of the social dimension of Europe was advanced by the Lisbon Summit in March 2000, and this paper considers the future direction of social policy. The first step towards a social agenda could take the form of benchmarking, based on national competencies in this field, with Member States learning from best performance in the Union; this step would be parallel to the first phase of the Maastricht process towards macro-economic convergence. Initially, this benchmarking would focus on financial poverty: people living in households with economic resources below the level used by Eurostat (60% of the median in the Member State), with this being accompanied by a measure of child poverty. Social investment in improving labour market skills and employability, or an active welfare state, is an important part of antipoverty policy, but is not a complete substitute for social spending. The European countries which perform best in terms of reducing poverty tend to have higher social spending. Such statistical performance indicators need however to be accompanied by evaluation of the relationship between policy instruments and poverty reduction, showing the trade-off between poverty reduction and social spending at the level of individual policies. Illustrative estimates using EUROMOD suggest that employing universal social transfers to reduce a country's poverty rate from the EU-average of 18% to the best-performing average of 12% would necessitate an increase in social transfers of some 2% of GDP. More targeted schemes may allow sizeable expenditure savings but at the cost of increased disincentives; the design of Europe's social agenda has to confront well-known issues of economic trade-offs; economic and social policy cannot be divorced.

It has long been known, from the work of Samuelson and Aaron, that if (approximately) the sum of the population and real earnings growth rates exceeds the real interest rate, all individuals can be made better off by using a pay‐as‐you‐go pension scheme. The basic overlapping generations model that is typically used to examine such intergenerational transfers makes no allowance for labour supply responses to taxes and transfers, and so cannot be used to examine optimal tax and pension levels. The present paper allows for labour supply effects, whereby a tax imposed to finance current pensions introduces distortions to labour supply and a reduction in the tax base. The optimal proportional tax rate, and therefore the optimal combination of private savings and social transfers, is derived in terms of the time preference rate, the taste for leisure, real interest and productivity and population growth rates. It is found that the condition under which the optimal tax is positive is the same as the Samuelson–Aaron condition. A crucial ingredient in obtaining this result is an assumption that pension levels are adjusted in line with the growth of wage rates rather than, for example, being held constant in real terms. This in turn is found to imply that earnings grow at the same rate as the wage, so long as preferences are such that leisure can be expressed as a proportion of full income.

This paper examines the implications of political factors for social policy choices. Specifically, we explore the link between regime type and adoption of unconditional transfers versus transfers conditioned on beneficiaries' investments in human capital. Due to the direct nature of benefits, unconditional transfers are more likely to be used to buy off opposition and prevent social unrest. As transfers that are conditioned on education and health pay off only in a relatively distant future, they are rarely initiated for political motives and rather defined by interests of long-term development and human capital accumulation. Using the new dataset on Non-Contributory Social Transfer Programs (NSTP) in developing countries, we find that transfers are indeed chosen so as to be unconditional under less democratic regimes. There is some evidence that conditional transfers are more likely to be adopted in democracies. In particular, democracies tend to increase the number of conditional schemes once any social transfer program is introduced.