ABSTRACT OF PAPER
Title: Welfare models, inequality and economic performance during globalisation
Author: Tridico Pasquale
The objective of this paper is to explore whether “the efficiency thesis” concerning the relation between welfare states and globalisation is functional for economic growth or, alternatively, whether “the compensation thesis” produces better results in terms of economic growth. The current economic crisis (2007-13) was a test for advanced economies and in particular for the European Union (EU) to determine whether the socio-economic model that EU member states built in the previous decades was able to cope with the challenges of globalisation. My hypothesis is that the efficiency thesis, according to which globalisation needs to be accompanied by the retrenchment of welfare states in order for firms to be competitive, does not cause economic growth. The tests are conducted in a sample of 42 countries made up of OECD and EU members. On the contrary, our econometric exercises indicate that the “compensation thesis” (i.e., regulated globalisation and an expanded welfare state) is better able to produce higher economic growth. In this context, a new classification emerges between Welfare Capitalism and Financial Capitalism. In the countries that belong to the first category, welfare states not only contribute to reduce inequality, but it also fosters economic growth. On the contrary, the countries in the second category have higher inequality, and during the current economic crisis, they also exhibit worse economic performance. In other words, in this analysis, the welfare state does not appear to be a drain on economic performance and competitiveness or as a barrier to economic efficiency. The most generous of Europe’s welfare states are also the most efficient and successful economies. These countries’ comparative economic performance, measured in this paper with a so-called Performance Index (PI) that combines GDP growth and labour market performances (employment growth and unemployment levels) since the 2007 global financial crisis, has been considerably better.
Registred web users only can download this paper - Go back
Please note that files available for download have not been checked for viruses. These files have been submitted by authors of the conference to this web site. Conference organisers can't accept any responsibility for damages caused to users by downloading such files.