Caring in the time of austerity

Stephen Gibbons and Christian Hilber

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

Abstract: The years after the election of the UK’s coalition government in 2010 saw a decline in central funding to local government and a fall in expenditure on a range of local services, including social services. These cuts were backed by a theory that individuals in the community would step in with voluntary action (the ‘Big Society’) to fill the void left by withdrawal of public support, a specific case of the argument that government activity crowds out that of private individuals. With borrowing costs in the UK sharply increasing and austerity debates resurfacing elsewhere in Europe, evaluating the consequences of the previous round of spending cuts is particularly timely. Using a large panel survey of individuals linked to detailed local government income and spending data for the period from 2008/9 until 2016/7 and exploiting central government funding cuts as an exogenous source of variation in Local Authority spending, we estimate how these changes in public support affected individual caring, voluntary and charitable behaviour. Our main finding is that spending cuts had no causal effects on these activities when considered in the aggregate, providing little support for the proposition that cutting public sector spending increases individual caring and philanthropic activities. The near-null results, however, mask spatial heterogeneity: rural communities show greater responsiveness to spending cuts than urban populations, consistent with thinner provision of formal public and third-sector support in rural areas.

Keywords: public spending; social care; charitable giving; crowding out hypothesis; Big Society (search for similar items in EconPapers)
JEL-codes: D64 H50 I11 I30 N30 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2027-01-01
References: Add references at CitEc
Citations:

Published in Regional Science and Urban Economics, 1, January, 2027, 122. ISSN: 0166-0462

Downloads: (external link)
https://researchonline.lse.ac.uk/id/eprint/140968/ Open access version. (application/pdf)

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:ehl:lserod:140968

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().