One Welfare State for Europe: A Costly Utopia?

Thierry Warin and Peter Hennessy

Middlebury College Working Paper Series from Middlebury College, Department of Economics

Abstract: This paper addresses the question of the social policy harmonization in the European Union. In adopting a common monetary policy Europe is faced with structural and fiscal concerns, as national growth levels differ. Another possible factor in output shocks are the levels of various social expenditures in the member countries. OECD data on the level of social program expenditures in four EU countries will wb compared to fluctuations in GDP growth to identify existing relationships. Significant relationships between independent social expenditure policy and GDP growth shocks portends structural harmonization as an improvement if Europe is to take full advantage of the common market. However, the effects of expenditure levels may be easier to identify and predict than the dynamic effects of policy change. As the effects of future policy changes are more difficult to ascertain, harmonization may not consistently appear to be a Pareto-optimum solution to asymmetric shocks.

Keywords: Europe; welfare state; coordination; integration (search for similar items in EconPapers)
JEL-codes: D6 H77 I18 I38 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2003-09
New Economics Papers: this item is included in nep-edu and nep-eec
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Journal Article: One Welfare State for Europe: A Costly Utopia? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:mdl:mdlpap:0325

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