ISBN-10:
0262182440
ISBN-13:
9780262182447
Pub. Date:
01/21/2005
Publisher:
MIT Press
The Decline of the Welfare State: Demography and Globalization / Edition 1

The Decline of the Welfare State: Demography and Globalization / Edition 1

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Overview

An analysis of the welfare state from a political economy perspective that examines the effects of aging populations, migration, and globalization on industrialized economies.

In The Decline of the Welfare State , Assaf Razin and Efraim Sadka use a political economy framework to analyze the effects of aging populations, migration, and globalization on the deteriorating system of financing welfare state benefits as we know them. Their timely analysis, supported by a unified theoretical framework and empirical findings, demonstrates how the combined forces of demographic change and globalization will make it impossible for the welfare state to maintain itself on its present scale. In much of the developed world, the proportion of the population aged 60 and over is expected to rise dramatically over the coming years—from 35 percent in 2000 to a projected 66 percent in 2050 in the European Union and from 27 percent to 47 percent in the United States—which may necessitate higher tax burdens and greater public debt to maintain national pension systems at current levels. Low-skill migration produces additional strains on welfare-state financing because such migrants typically receive benefits that exceed what they pay in taxes. Higher capital taxation, which could potentially be used to finance welfare benefits, is made unlikely by international tax competition brought about by globalization of the capital market. Applying a political economy model and drawing on empirical data from the EU and the United States, the authors draw an unconventional and provocative conclusion from these developments. They argue that the political pressure from both aging and migrant populations indirectly generates political processes that favor trimming rather than expanding the welfare state. The combined pressures of aging, migration, and globalization will shift the balance of political power and generate public support from the majority of the voting population for cutting back traditional welfare state benefits.

Product Details

ISBN-13: 9780262182447
Publisher: MIT Press
Publication date: 01/21/2005
Series: CESifo Book Series
Pages: 144
Product dimensions: 6.00(w) x 9.00(h) x 1.00(d)
Age Range: 18 Years

About the Author

Assaf Razin is a former Professor at Cornell University, Emeritus Professor at the Eitan Berglas School of Economics at Tel Aviv University, and Research Fellow at the NBER, CEPR, and CESifo. He is the author of Understanding Global Crises: An Emerging Paradigm and a coauthor of, among other books, The Decline of the Welfare State: Demography and Globalization and Migration and the Welfare State: Political-Economy Policy Formation , all published by the MIT Press. He is the recipient of the 2017 EMET Prize in Economics.

Efraim Sadka is Henry Kaufman Professor of International Capital Markets at Tel Aviv University.

Table of Contents

Prefacevii
1Overview1
IPolitical Economics
2Aging, Migration, and the Widening Wage Gap9
3Migration and the Welfare State39
4Balanced-Budget Rules and the Downscaling of the Welfare State47
5The Capital-Tax-Financed Welfare State61
6Aging and the Welfare State: Empirical Evidence75
IIGlobalization
7Capital Taxation: The Shadow of International Tax Competition89
8The Downward Convergence of Capital Taxation across Countries: Evidence from the European Union107
Notes113
References121
Index127

What People are Saying About This

Roger Gordon

Razin and Sadka's work provides an intriguing challenge to conventional wisdom about the future of the welfare state. Surprisingly, they show that both an aging population and immigration of low-skilled workers can undermine political support for the welfare state, in spite of the increased number of potential beneficiaries. The reported evidence supports their claims. For anyone concerned about the welfare state, this book is essential.

Guido Tabellni

"Combining analytical precision and policy relevance, this book makes a fundamental contribution to a topic of critical importance for the future of advanced democracies"

Endorsement

Razin and Sadka's work provides an intriguing challenge to conventional wisdom about the future of the welfare state. Surprisingly, they show that both an aging population and immigration of low-skilled workers can undermine political support for the welfare state, in spite of the increased number of potential beneficiaries. The reported evidence supports their claims. For anyone concerned about the welfare state, this book is essential.

Roger Gordon, Department of Economics University of California San Diego

From the Publisher

"Combining analytical precision and policy relevance, this book makes a fundamental contribution to a topic of critical importance for the future of advanced democracies"

Guido Tabellni , Professor of Economics, Bocconi University

Razin and Sadka's work provides an intriguing challenge to conventional wisdom about the future of the welfare state. Surprisingly, they show that both an aging population and immigration of low-skilled workers can undermine political support for the welfare state, in spite of the increased number of potential beneficiaries. The reported evidence supports their claims. For anyone concerned about the welfare state, this book is essential.

Roger Gordon , Department of Economics University of California San Diego

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