Financing welfare regimes: a literature review and cluster analysis

Ian Gough and Miriam Abu Sharkh

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper studies how the composition of public revenues, in terms of sources like taxation, contributions to social insurance programmes, mineral rents and aid, is associated with different welfare regimes and social policy outcomes. It is divided into two main parts: a literature review and cross-national data analysis. The first part summarises theories and research. It uses a model derived from scholarly research into the development of Western welfare states which identifies five explanatory factors, the “5 I’s”: industrialisation, interests, institutions, ideas and international influences. The model is applied to the development of tax and revenue systems as well as welfare systems in the West, and then its applicability to the developing world is discussed. The authors note parallels and differences in the findings on fiscal states and welfare states, and the more striking differences between the North and the South. The conclusion is that the model has less purchase in understanding welfare and revenue systems in the developing world. In the second part, the authors develop a novel model of welfare regimes and demonstrate its utility as a framework for analysing social policy in the developing world. Subsequent sections then operationalise this framework using cluster analysis to identify patterns in welfare regimes and revenue systems across the developing world. The empirical analysis draws on data for 65 non-OECD countries, excluding small countries, for the year 2000, covering welfare regimes, revenue structures, and the relationship between the two. In the conclusion, the authors explore whether a relationship between specific revenue structures, regime types and welfare outcomes across the global South can be identified.

JEL-codes: D6 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2010-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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