Social Dominance

Ludger Schuknecht and Holger Zemanek

No 2018/30, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: Based on the observation of an unabated trend towards higher social spending ratios in advanced countries, the study analyzes the risk of “social dominance”, where social expenditures dominate fiscal policy, and undermine growth and fiscal sustainability. We scrutinize this risk by analyzing drivers of social expenditures and their interaction with other fiscal variables. Results show, that social expenditure expansion is largely ageing driven, it crowds out other primary expenditures and there is evidence of unsustainability.These findings and the accelerating trend of population ageing and particularly high political costs to reforming social expenditure suggest significant and rising risks of “social dominance”.

Keywords: fiscal policy; social expenditures; political economy; crowding out; fiscal sustainability (search for similar items in EconPapers)
JEL-codes: E62 H30 H55 (search for similar items in EconPapers)
Date: 2018-02
New Economics Papers: this item is included in nep-age, nep-mac and nep-pbe
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Related works:
Working Paper: Social Dominance (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp0302018

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