Redistribution and Insurance in Welfare States around the World

Charlotte Bartels and Dirk Neumann ()
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Dirk Neumann: Federal Ministry for Economic Affairs and Climate Action (BMWK), Germany

No 13675, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Redistribution across individuals in a one-year-period framework is an empirically intensely studied question. However, a substantial share of annual redistribution might turn out to serve individual insurance in a longer perspective, reducing the level of actual redistribution across individuals. This paper investigates to what extent long-run redistribution diverges from annual redistribution in welfare states of different types. Exploiting panel data from the Cross-National Equivalent File (CNEF) for Australia, Germany, South Korea, Switzerland, the United Kingdom, and the United States, we find that welfare states like Germany that are assumed to engage in a high level of redistribution actually achieve relatively less redistribution between individuals in the long run than the United Kingdom or the United States. Regression results show that a higher share of elderly in a country is associated with more annual redistribution, but with less long-run redistribution between individuals. The results suggest that, in welfare states with aging populations, we might expect growing annual redistribution that, to a substantial extent, is in fact income smoothing for the elderly.

Keywords: welfare states; redistribution; insurance (search for similar items in EconPapers)
JEL-codes: D31 D63 H53 H55 I38 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2020-09
New Economics Papers: this item is included in nep-age, nep-ias and nep-pbe
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Published - published in: Scandinavian Journal of Economics , 2021, 123 (4), 1116 - 1158

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Related works:
Journal Article: Redistribution and Insurance in Welfare States around the World (2021)
Journal Article: Redistribution and Insurance in Welfare States around the World (2021)
Working Paper: Redistribution and Insurance in Welfare States Around the World (2020)
Working Paper: Redistribution and Insurance in Welfare States around the World (2018)
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