Healthy, Educated and Wealthy: Is the Welfare State Really Harmful for Growth?

Sergio Beraldo, Daniel Montolio and Gilberto Turati ()

No 127, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: In this paper, we study how public and private expenditures in health and education affect economic growth by their influence on peoples health, abilities, skills and knowledge. We consider a growth accounting framework in order to test whether welfare expenditures more than offset the efficiency losses caused by distortionary taxation, and whether the effects of public expenditure on economic growth differ from those of private expenditure. Our empirical analysis is based on a panel of 19 OECD countries observed between 1971 and 1998. The results are consistent with the hypothesis that the contribution of welfare expenditures more than compensates for the distortions caused by the tax system; and the estimated positive impact is stronger for health than for education. We also find some evidence that public expenditure influences GDP growth more than private expenditure.

JEL-codes: H51 H52 I38 O47 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005
New Economics Papers: this item is included in nep-dev, nep-edu, nep-hea, nep-pbe and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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