Discussion Paper Details

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Title: Efficient and Inefficient Welfare States

Author(s): Yann Algan, Pierre Cahuc and Marc Sangnier

Publication Date: February 2011

Keyword(s): civism, corruption, trust and Welfare state

Programme Area(s): Public Economics

Abstract: This paper shows that cross country differences in the generosity and the quality of the welfare state are associated with differences in the trustworthiness of their citizens. We show that generous, transparent and efficient welfare states in Scandinavian countries are based on the civicness of their citizens. In contrast, the generosity but low transparency of the Continental European welfare states survive thanks to the support of a large share of uncivic individuals who consider that it can be justifiable to misbehave with taxes and social benefits. We also explain why countries with an intermediate degree of trustworthiness of their citizens and of transparency of the government, like Anglo-Saxon countries, have small welfare states. Overall, this paper provides a rationale for the observed persistence of both efficient and inefficient welfare states, as a function of the civicness of the citizens.

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Bibliographic Reference

Algan, Y, Cahuc, P and Sangnier, M. 2011. 'Efficient and Inefficient Welfare States'. London, Centre for Economic Policy Research.