Intergenerational risk shifting through social security and bailout politics

This paper adopts a stochastic overlapping generations framework to analyze the allocation of aggregate financial risks under different social security systems and a majority voting rule. We study whether there will be switches between pay-as-you-go (PAYG) and fully funded (FF) systems in such an economy. We show that in case of a negative aggregate shock, low-income young individuals will form a political coalition with the elderly to implement a PAYG system. PAYG scheme is shown to persist even after a good aggregate shock if the system is redistributive enough.     

Can social security be welfare improving when there is demographic uncertainty?

This paper studies the welfare implications of a PAYG pension system in an overlapping generations (OLG) model with demographic uncertainty and incomplete markets. In the absence of public pensions, small cohorts tend to be favoured by the changes in relative prices implied by demographic shocks. PAYG defined-benefit systems can help to share the financial risks created by this type of demographic uncertainty across generations. Our careful quantitative analysis test this possibility with unfavourable results: the overall welfare impact of the public pensions is negative, due to the prominence of the crowding-out effect over the insurance effect.     

Expansionary effects of the welfare state in a small open economy

We examine the relationship between welfare state policies and economic performance in a small open economy with (i) free trade in final goods and international capital mobility, and (ii) aggregate increasing returns to scale. Contrary to the conventional wisdom, we find that a retrenchment of welfare programmes is not an inevitable consequence of economic integration. Instead, by improving the exploitation of aggregate scale economies, social expenditure policies and international openness complement each other in facilitating an improvement in economic performance that can sustain a more generous welfare protection.     

Whither welfare?

Book reviewed in this article: Ginsburg, N. 1979: Class, capital and social policy. Gough, I. 1979: The political economy of the welfare state.     

On the role of labor supply for the optimal size of Social Security

The paper studies the welfare effects of a Social Security system in a stylized overlapping generations economy with random production and capital accumulation. Different welfare concepts including long run optimality, social optimality, and time consistency are employed to determine the optimal size of the system. When labor supply is exogenous, a unique contribution level can be identified which is optimal according to all three concepts. When labor supply is endogenous, however, this result generically fails to hold and the long-run optimal solution is only constrained socially optimal while the time-consistent policy may even lead to an inefficient equilibrium.     

THE ILLUSORY TAX BASE: WHY TAXES ON CAPITAL ARE COUNTERPRODUCTIVE

Taxes on capital are economically and socially counterproductive. The economy and society would benefit from their abolition. The obstacle to their abolition is not financial or economic but a failure of political will. This article looks at taxes on capital from an economic perspective: how do they differ from other taxes, what costs do they impose on the economy, and what are the consequences of their abolition? And, even if they are a failure economically, can they be justified socially or politically?     

Intergenerational justice when future worlds are uncertain

Let there be a positive (exogenous) probability that, at each date, the human species will disappear. We postulate an Ethical Observer (EO) who maximizes intertemporal welfare under this uncertainty, with expected-utility preferences. Various social welfare criteria entail alternative von Neumann Morgenstern utility functions for the EO: utilitarian, Rawlsian, and an extension of the latter that corrects for the size of population. Our analysis covers, first, a cake-eating economy (without production), where the utilitarian and Rawlsian recommend the same allocation. Second, a productive economy with education and capital, where it turns out that the recommendations of the two EOs are in general different. But when the utilitarian program diverges, then we prove it is optimal for the extended Rawlsian to ignore the uncertainty concerning the possible disappearance of the human species in the future. We conclude by discussing the implications for intergenerational welfare maximization in the presence of global warming.     

Fiscal centralization versus decentralization: Growth and welfare effects of spillovers, Leviathan taxation, and capital mobility

This paper develops an endogenous growth model with spillovers of public goods, Leviathan taxation, and mobile capital to examine the relative merits of centralized and decentralized fiscal systems for economic growth and social welfare. We show that a decentralized system dominates a centralized system in terms of economic growth; however, the difference in social welfare between a decentralized and a centralized system is non-monotonic and displays a hump-shaped relationship with respect to capital mobility. Since higher capital mobility induces stronger tax competition, this finding implies that there is an optimal degree of tax competition; some tax competition is desirable, but fierce tax competition may be harmful. We also show that there is a critical level of spillovers of public goods above which centralization dominates decentralization in terms of social welfare, as in previous studies; however, if spillovers are below this critical level, capital mobility also matters in the welfare comparison between centralized and decentralized systems.     

论我国的"二元经济"及其对物流的影响

由于我国二元经济的形成与扩大，造成物流发展领域狭小，物流渠道不畅。要解决这些问题，必须从价格政策、社会保障、社会福利及国家投资入手，努力缩小城乡差别，为实现全面富裕创造条件。     

不同征地补偿模式下失地农民福利变化研究——来自准自然实验模糊评价的证据

本文借助森的可行能力理论框架,利用模糊评价方法,采用准自然实验思路,试图比较不同的征地补偿模式对农民福利水平的影响,并得出结论:农民被征地后的福利水平较之前略有提高,但总体福利水平仍然较低.虽然土地换社保的补偿模式在保障失地农民收入水平方面不如土地换货币模式,但是前者给予农民更健全的社会保障制度,从而使农民获得更高的福利水平.     

Dynamics of social economy self-organized on social media: following social entrepreneur forum and social economy network on Facebook

Since the Korean government enacted the Social Enterprise Promotion Act of 2007 aiming to foster and support social enterprises, discourse on the social economy has proliferated both quantitatively and qualitatively. One explanation for this phenomenon is that government-driven policies have dominantly led social enterprises to the ecology of the social economy. To cope with pernicious issues such as unemployment, growing demand for welfare, and the widening gap between rich and poor, however, it cannot be discounted that social activists and nonprofits also have facilitated the development of social enterprises by building online and offline networks. To fill this niche of applying these concepts to the Asian context, this research aims to investigate the ecology of the social economy by analyzing critical stakeholders and keywords embedded in self-organizing networks on social media. This case is critical and attractive to researchers and practitioners not only because the discourse on social economy has not been fully examined but also because self-organizing networks on social media act as social capital among stakeholders and thus offer valuable insights into dealing with the enduring problems that government-driven policies seem unsolvable. By analyzing the evolution of self-organizing social economy networks and social entrepreneurs on Facebook, this research provides policy implications for other Asian countries with underdeveloped social economies and theoretically contributes to the field of public policy analysis and management.     

Social capital and well-being in the Italian provinces

Recent years witnessed a growing interest in the concept of well-being and quality of life, as alternative to the Gross Domestic Product (GDP). The determinants of well-being, especially at the regional and provincial levels, is understudied in a macro perspective, as opposed to a micro perspective (individuals, survey data) that has been the dominant approach until recently. In this paper, we estimate an empirical model for the Italian NUTS-3 provinces to evaluate the role of social capital on well-being by using aggregated (provincial) data. Our findings suggest that social capital, social security programs, income, and grant-making activities by Bank Foundations, even though not uniformly distributed across Italy, positively affect well-being, thus contributing to explain the persistent dualism that characterizes the Italian economy.     

The impact of changes to the human resources function in Australia

With the rapid development of information technology (IT) in the late twentieth century, a 'real-time' global economy is now taking shape. The social costs of being networked in the global economy vary across nations and regions. Some report job losses and fragmented working conditions, and in general social structure is endangered. The idea of maintaining a nation's social safety net and the traditional concept of the welfare state is now challenged. In this article, we deal with three issues. First, we point out that new social risks are formed by the structural change in the labour market. Second, the interaction of the nation-state and global economy is addressed; in facing new social risks, we argue, the role of nation-state is still important. However, the traditional paradigm of the welfare state needs to be re-conceptualized. Third, with the expanding view of the welfare state, this paper examines the developments of constructive welfare policies and discusses the social transformation processes in Singapore, especially in the face of the new social risks caused by globalization.     

Climate Change Policies and Tax Recycling Schemes: Simulations with a Dynamic General Equilibrium Model of the Italian Economy

A dynamic general equilibrium model of the Italian economy is used to assess the impact of carbon taxation (or auctioned carbon permits), where additional revenue is used to cut either existing taxes on labor or on capital income. Simulation results do not support the existence of the so-called "double dividend" when labor taxes are reduced, whereas lower tax rates on capital have mild positive effects on growth and welfare, with progressivity properties on income distribution. These findings hinge on the assumptions of open economy, given world interest rate, and capital mobility.     

Social Capital Across European Countries: Individual and Aggregate Determinants of Group Membership

Social capital refers to norms and networks of reciprocity, trust, and cooperation that facilitate coordinated action for a mutual benefit. Theoretical and empirical studies have documented the positive contribution of social capital in social welfare and development. This study empirically explores the determinants of social capital, in the form of group membership, across European countries. Data is derived from the European Community Household Panel, which covers a large sample of individuals from a set of European countries. Binary logistic regression models are applied to regress an index of individuals' group membership on a set of individual characteristics (income, education, gender, age, marital status, employment), as well as aggregate characteristics of countries (GDP per capita, income inequality, social trust, trust in public institutions, corruption, unemployment, and violation of political and civil rights). Results provide evidence of the impact of both individual and aggregate factors on group membership. These factors constitute a possible means to rebuilding patterns of social capital, especially in Southern European countries, where special‐interest groups and patron‐client relations prevail over generalized norms and networks of reciprocity, trust, and cooperation that promote wider social welfare and development objectives.     

The long-term unemployed,informal economic activity and the ‘underclass’ in Belfast: rejecting or reinstating the work ethic

The notion of an ‘underclass’ existing outside the realm of mainstream society continues to hold sway among journalists and policy-makers. While there are many new contenders for inclusion among the underclass, one of the most enduring group of participants is the long-term unemployed. Work-shy individuals, seemingly content to live on welfare benefits, are regarded as placing themselves outside the boundaries of mainstream economic and social life and passing a host of negative characteristics on to their children. The possibility that some of this group might defraud the welfare benefit system through working while claiming benefits adds further weight to negative images about the characteristics of ‘underclass’ members. The aim of this paper is to challenge some of these common assumptions by examining the ways in which unemployed people in an economically depressed locality in West Belfast relied on informal economic activity to help meet their material needs. Such activity has implications for the underclass debate because, rather than demonstrating commitment to some alternative set of values, informal economic activity drew participants into the wider economy and demonstrated adherence to mainstream values. Moreover, often the debate on social security abuse focuses on the supply side of the issue and is remarkably silent about the demand side of the equation. ‘Doing-the-double’ (working while claiming benefits) was not simply an individual response to unemployment and inadequate welfare benefits but was linked to changes in the labour needs of employers in the wider economy.     

The Long-Run Effect of Economic Development Policy on Resident Welfare in a Perfectly Competitive Urban Economy

This paper argues that evaluations of economic development policy must consider the long-run effect on resident welfare. The paper uses comparative static analysis of a closed, urban economy with an explicit labor market, to investigate the effect of policies that stimulate economic activity. The paper finds that such policies do not necessarily raise resident welfare, because of the competition for land between firms and households. On the other hand, the paper does find that income transfers increase resident welfare. This model assumes, however, that the land, capital, and labor markets are perfectly competitive. Therefore, these results are based on the assumption that an urban economy is efficient.     

福利生产管理必须适应福利生产从计划经济向市场经济的转变

历史在发展,社会在变化,福利生产也处于这种变化之中,只有以变应变才能适应社会的发展。因此,福利生产管理必须适应福利生产从计划经济向市场经济的转变,这种转变主要体现在管理模式的转变、权力模式的转变以及从行政收费到市场服务收费的转变。     

Risky bank lending and countercyclical capital buffers

We study the properties of a monetary economy with an essential role for risky bank lending. Banks issue deposits and lend to entrepreneurs. Because banks׳ lending rate cannot be made contingent on aggregate shocks, and because banks face capital adequacy regulations, they require a capital buffer against loan losses. Capital adequacy regulations are modeled on the Basel-III rules, including a minimum capital adequacy ratio, an endogenous capital conservation buffer, and a countercyclical capital buffer. We find that a countercyclical capital buffer leads to a significant increase in welfare. It also reduces the need for countercyclical adjustments in policy interest rates.     

A new approach to capital control for emerging market economies

The present paper proposes a new approach to capital control for emerging market economies, which restricts capital inflows to a fraction of the gap between foreign currency denominated loans and deposits in the economy. We show that the foreign-currency-gap capital control proposed here outperforms tax-based capital control in attenuating the negative effects of external shocks on business cycle fluctuations. This attenuation effect works via the interest rate channel and the capital control constraint itself. Compared to tax-based capital control, the foreign-currency-gap capital control is welfare enhancing, effectively mitigating financial instability with little cost in terms of macroeconomic stability. Countries with a high level of foreign currency denominated loans and deposits need to implement a stricter foreign-currency-gap capital control.