Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76414
Authors: 
De Grauwe, Paul
Polan, Magdalena
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper 885
Abstract: 
We provide evidence indicating that countries with well-developed social security systems do not necessarily face a trade-off between social spending and competitiveness. On average, countries that spend a lot on social needs score well in the competitiveness league. We investigate the importance of a reverse causality from competitiveness to social spending, and find that this is weak. We also present some possible explanations for our empirical finding. Finally, we interpret our findings in the framework of a theoretical model in which risk affects the size of the social sector and in which social spending affects the production function of the private sector.
Subjects: 
economic integration
globalisation
terms-of-trade variability
international trade
globalization
Document Type: 
Working Paper

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