Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/176913
Authors: 
Schuknecht, Ludger
Zemanek, Holger
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper 6894
Abstract: 
Based on the observation of an unabated trend towards higher social spending ratios in advanced countries, the study analyzes the risk of “social dominance”, where social expenditures dominate fiscal policy, and undermine growth and fiscal sustainability. We scrutinize this risk by analyzing drivers of social expenditures and their interaction with other fiscal variables. Results show, that social expenditure expansion is largely ageing driven, it crowds out other primary expenditures and there is evidence of unsustainability. These findings and the accelerating trend of population ageing and particularly high political costs to reforming social expenditure suggest significant and rising risks of “social dominance".
Subjects: 
fiscal policy
social expenditures
political economy
crowding out
fiscal sustainability
JEL: 
E62
H30
H55
Document Type: 
Working Paper

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