Working Paper: CEPR ID: DP1018
Authors: Dennis J. Snower
Abstract: The paper examines the appropriate domain of the Welfare State by exploring the areas in which free enterprise fails to provide adequate welfare state services. The paper outlines a simple coherent strategy for formulating government welfare state policy by identifying the relevant market failures, government failures, and implementation costs. Two proposals for reform of the Welfare State are outlined.
Keywords: welfare state; free enterprise; unemployment; education; health; poverty; inequality
JEL Codes: H1; H2; H4; 11; 12; 13; P5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| individual hiring decisions (M51) | market failure (D52) |
| free enterprise without compensation for benefits (P12) | underemployment (J64) |
| government intervention (payroll tax reductions or employment subsidies) (J68) | adequate provision of welfare state services (I38) |
| hiring unemployed workers (J68) | increased profits and wage incomes in other firms (D33) |
| uncompensated costs and benefits in education and health services (I21) | market failures (D52) |