On the long-term macroeconomic effects of social spending in the United States
Alfredo Pereira and
Jorge Andraz
Applied Economics Letters, 2015, vol. 22, issue 2, 132-136
Abstract:
We estimate the long-term impact of changes in social security and social protection spending on economic performance in the United states. We estimate a VAR model relating GDP, unemployment rates, saving rates and social spending. Our results suggest that social spending has significant distortionary effects in the labour markets as measured by its long-term effects on the unemployment rate, which translate into a detrimental effect on long-term output, this despite a positive, albeit small, effect on the gross savings rate. There are important policy implications of these results. If one considers the systems as they are, any further expansion in their generosity would have detrimental long-term effects. These detrimental effects, however, are neither an indictment of social spending nor evidence against extension of benefits. What they highlight is the need to carefully consider the financing mechanisms currently used and the need to align benefits and contributions in the pension component of social security and the need to find a tax revenue mix that is less distortionary for the unfunded benefits.
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2014.929620 (text/html)
Access to full text is restricted to subscribers.
Related works:
Working Paper: ON THE LONG-TERM MACROECONOMIC EFFECTS OF SOCIAL SPENDING IN THE UNITED STATES (2014) 
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:taf:apeclt:v:22:y:2015:i:2:p:132-136
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20
DOI: 10.1080/13504851.2014.929620
Access Statistics for this article
Applied Economics Letters is currently edited by Anita Phillips
More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().