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1、THERESEARCHINSTITUTEOFINDUSTRIALECONOMICSWorkingPaperNo.595,2003AnEssayonWelfareStateDynamicsbyAssarLindbeckIUI,TheResearchInstituteofIndustrialEconomicsP.O.Box5501SE-11485StockholmSweden115/5,2003AssarLindbeck:AnEssayonWelfareStateDynamicsAbstractTheexpansionofwelfa
2、re-statearrangementsisseenastheresultofdynamicinteractionbetweenmarketbehaviourandpoliticalbehaviour,oftenwithconsiderabletimelags,sometimesgeneratingeithervirtuousorviciouscircles.Suchinteractionmayalsoinvolveinduced(endogenous)changesinsocialnormsandpoliticalpre-fe
3、rences.Moreover,theinternationalisationprocessnotonlylimitstheabilityofnationalgovernmentstoredistributeincome;theyalsoincreasethepoliticaldemandsforinternationalmobilityofwelfare-statebenefitsandsocialservices.Ialsodiscussthedynamicsofreformsandretreatsofwelfare-sta
4、tearrangements.JELClassificationnumber:H1,H5Keywords:welfarestate,welfare-statedynamics,politicalequilibrium,socialnormsIamgratefultoToreEllingsenforusefulcommentstoanearlierversion.2Itisusefultodiscusswelfare-statearrangementsandtheirconsequencesinthecontextofdynami
5、cprocesses,withthedevelopmentinoneperiodcriticallyinfluencingsubsequentdevelopments.Forinstance,theexpansionofwelfare-statearrangementsthduringthe20centurymaybeseenastheresultofdynamicinteractionbetweenmarketbehaviourandpoliticalbehaviourovertime,oftenwithconsiderabl
6、etimelags(sectionI).Suchinteractionmayalsoresultineithervirtuousorviciousspirals(sectionII).Moreover,welfare-statedynamicsmayinvolveinduced(endogenous)changesinsocialnormsandpoliticalpreferences,whichalsotendtooccuronlyafterconsiderabletimelags(sectionIII).Finally,Im
7、akesomecommentsonthedynamicsofreformsandretreatsofwelfare-statearrangements(sectionIV).Clearly,theoryandspeculationarefar‘ahead’ofsystematicempiricalresearchinthefieldofwelfare-statedynamics.Thispapermaypartlybeseenasacallformoreempiricalresearchinthefield.I.THEEXPAN
8、SIONOFWELFARE-STATEARRANGEMENTSGenerallyspeaking,welfare-statearrangementsare,ofcourse,meanttoenhanceincomesecurityandprovidesocial