The Welfare State and Economic Growth

Vratislav Izák

Prague Economic Papers, 2011, vol. 2011, issue 4, 291-308

Abstract: The paper examines whether redistribution policy is bad or good for economic growth by analysing government expenditure on the welfare state in the old and new post-socialist EU countries from the mid-1990 to 2008. Due to the differences among countries fixed effect is included in the model using panel data. We find negative association between the mean values of expenditure on the welfare state in several time periods and the subsequent GDP growth rate for EU-25 and also for the subsets (EU-15 and EU-10) of the EU countries. When taking into account explicitly the government budget constraint and applying dynamics the same conclusion can be drawn for EU-25. Welfare state expenditure has statistically significant negative coefficient confirming the postulated hypothesis of a negative impact on the GDP growth rate.

Keywords: economic growth; government expenditure; welfare state; panel fixed effects (search for similar items in EconPapers)
JEL-codes: E6 H5 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://pep.vse.cz/doi/10.18267/j.pep.401.html (text/html)
http://pep.vse.cz/doi/10.18267/j.pep.401.pdf (application/pdf)
free of charge

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:prg:jnlpep:v:2011:y:2011:i:4:id:401:p:291-308

Ordering information: This journal article can be ordered from
Editorial office Prague Economic Papers, University of Economics, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic
http://pep.vse.cz

DOI: 10.18267/j.pep.401

Access Statistics for this article

Prague Economic Papers is currently edited by Klára Pavlová

More articles in Prague Economic Papers from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().