The Welfare State besides Globalization Forces

Assaf Razin and Efraim Sadka

No 24919, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we review of literature and offer historical, empirical and analytical explanation for the interactions between the welfare state and globalization driving forces. Globalization – a widespread contemporaneous phenomenon – generates international tax competition. The consequent erosion in the tax base, especially on capital, is another blow to the finances of the welfare state. Financial globalization facilitates reallocation of capital across borders. The increased mobility of capital may likely to trigger a race-to-the-bottom tax competition. The consequent erosion in the tax base, especially on capital, is potentially a blow to the fiscal finance backing up the far-reaching redistribution of income by the typical welfare state. Another major aspect of globalization, low skill migration, attracted to the welfare state may put additional strain on it. An aging welfare-state – a common contemporary phenomenon in many industrial countries calls for young and high skill immigrants for its survival.

JEL-codes: F0 F15 F22 H2 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-int
Note: IFM
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Citations: View citations in EconPapers (3)

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Working Paper: The Welfare State besides Globalization Forces (2018)
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