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Convergence in social protection across EU countries, 1970-1999

Simon Sosvilla-Rivero (), José Herce () and Juan de Lucio ()

No 2003-01, Working Papers from FEDEA

Abstract: This paper has examined the degree of convergence in social protection registered in the European Union (EU) during the 1970-1999 period. To that end, we study the long-run properties of time series of social protection benefits, applying unit root tests that allow for endogenously determined changes in the deterministic trends to data from Eurostat for the 12 member countries that formed the EU before the enlargement to Austria, Finland and Sweden. Our results suggest that there is no evidence of long-run or strong convergence (neither with respect to Germany nor with respect to the EU12 average) in Social Protection expenditure to GDP ratios, that would imply equalisation of the latter. However we do find evidence of catching-up or weak convergence with respect to both Germany (as a bench-mark) and the EU12 average for all countries, except Greece. These results, in turn, suggest that some countries have been carrying out a stronger effort, as far as social protection is concerned, what has resulted in their situation converging with that of other countries where social protection expenditure has been much more significant all through the period. This effort can contribute to facilitate factor mobility within Europe and, as we have argued somewhere else, may have implications for the speed of growth in member states and the EU at large.

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