OECD Social, Employment and Migration Working Papers

ISSN :
1815-199X (online)
DOI :
10.1787/1815199x
Hide / Show Abstract
This series is designed to make available to a wider readership selected labour market, social policy and migration studies prepared for use within the OECD. Authorship is usually collective, but principal writers are named. The papers are generally available only in their original language - English or French - with a summary in the other.
 

How Expensive is the Welfare State?

Gross and Net Indicators in the OECD Social Expenditure Database (SOCX) You or your institution have access to this content

Authors:
Willem Adema, Maxime Ladaique
Publication Date
13 Nov 2009
Bibliographic information
No.:
92
Pages
98
DOI
10.1787/220615515052

Hide / Show Abstract

This paper first presents information on trends and composition of social expenditure across the OECD. Gross public social expenditure on average across OECD increased from 16% of GDP in 1980 to 21% in 2005, of which public pensions (7% of GDP) and public health expenditure (6% of GDP) are the largest items. This paper then accounts for the effects of the tax system and private social expenditure which leads to a greater similarity in social expenditure-to-GDP ratios across countries and to a reassessment of the magnitude of welfare states. After accounting for the impact of taxation and private benefits, social expenditure (1) amounts to over 30% of GDP at factor cost in Belgium, Germany, and France and (2) ranges within a few percentage points of each other in Austria, Canada, Denmark, Finland, Italy, the Netherlands, Portugal and the United States.
Keywords:
public welfare system, taxation of benefit income, private social spending, tax breaks with a social purpose, social policy
JEL Classification:
  • H2: Public Economics / Taxation, Subsidies, and Revenue
  • H53: Public Economics / National Government Expenditures and Related Policies / Government Expenditures and Welfare Programs