Does Social Policy Contribute to Economic Growth?

Mauro Baranzini

Swiss Journal of Economics and Statistics (SJES), 1999, vol. 135, issue III, 439-454

Abstract: In this paper we try to assess whether social policy represents an incentive or a disincentive to economic growth. In general, one may say that social policies, or the Welfare State, entail an increasing degree of redistribution from higher income earners or wealth holders to the lowest deciles of the population. We attempt to gain additional insights into the controversy by using a new taxonomy and by linking (a) the short-run, (b) the micro-(i.e. personal) with the macro-(i.e. functional) components, and (c) the distribution of labour income with the distribution of wealth. In very general terms it emerges that, while inequality in the distribution of wealth may represent a bonus for economic growth, inequality in the distribution of labour income may weaken the momentum for growth.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ses:arsjes:1999-iii-12

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