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.
- ISSN: 1815199X (online)
- https://doi.org/10.1787/1815199X
How Expensive is the Welfare State?
Gross and Net Indicators in the OECD Social Expenditure Database (SOCX)
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: social policy, private social spending, tax breaks with a social purpose, taxation of benefit income, public welfare system
JEL:
H53: Public Economics / National Government Expenditures and Related Policies / Government Expenditures and Welfare Programs;
H2: Public Economics / Taxation, Subsidies, and Revenue
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