Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81179
Authors: 
Lindbeck, Assar
Year of Publication: 
2005
Series/Report no.: 
IUI Working Paper 646
Abstract: 
The paper discusses a number of threats to the financial sustainability of social spending: increased internationalization of national economies, gradually higher relative costs of producing a number of human services, the “graying” of the population, slower productivity growth in the private sector, low employment rates, and various types of disincentive effects related to the welfare state itself, including moral hazard. I argue that threats from gradually rising costs of providing human services and disincentive effects of welfare-state arrangements, in particular moral hazard and benefit dependency, are more difficult to deal with than the other threats. I also discuss the choice between ad hoc policy reforms and automatic adjustment mechanisms, delegated to administrative bodies, for dealing with these threats.
Subjects: 
Sustainable Fiscal Policy
Baumol’s Disease
Moral Hazard
Automatic Adjustment Mechanisms
JEL: 
E62
H31
H53
Document Type: 
Working Paper

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