OECD Social, Employment and Migration Working Papers

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.

English, French

The "Enabling State?" from Public to Private Responsibility for Social Protection

Pathways and Pitfalls

Policies designed to advance the march toward private financing and delivery of social services follow five main pathways. While some of these approaches to privatization are more direct and transparent than others, all may be pursued simultaneously. Three approaches concentrate on increasing private financing and the other two on increasing the production and delivery of goods and services by the private sector: • Encouragement through tax incentives • Requirements through fees for service • Mandating through legislation • Providing public benefits in the form of cash or vouchers • Purchase-of-service arrangements. Along each of these five paths the state plays a direct or indirect role in stimulating private financing or delivery of benefits in cash or kind. All social welfare benefits are to some degree subsidized or mandated by the state — in part it is the public intervention by fiscal or legal means that makes these benefits “social.” Some social goods and services may be more amenable to public or private provision than others. And traditional relations among government, business, and labour in different societies will certainly influence the preferred paths toward increased private responsibility. In treading the pathways toward privatization, the objective is not to find the shortest route, but to avoid the pitfalls along the way – and to chart a course that is not so focussed on economic efficiency that it loses sight of the public purpose of social protection.


JEL: H53: Public Economics / National Government Expenditures and Related Policies / Government Expenditures and Welfare Programs; L33: Industrial Organization / Nonprofit Organizations and Public Enterprise / Comparison of Public and Private Enterprises and Nonprofit Institutions; Privatization; Contracting Out; L31: Industrial Organization / Nonprofit Organizations and Public Enterprise / Nonprofit Institutions; NGOs; Social Entrepreneurship
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error