Convergence Analysis of the Structure of Social Protection Financing

By Puss, Tiia; Viies, Mare et al. | International Advances in Economic Research, February 2005 | Go to article overview

Convergence Analysis of the Structure of Social Protection Financing


Puss, Tiia, Viies, Mare, Kerem, Kaie, International Advances in Economic Research


Abstract

Expenditure on social protection in the European Union (EU) member states has been increasing rapidly over the last decade. To cover the increasing expenses, the countries need to find ways to increase revenues. Social protection financing systems and structure of financing vary across countries, but all of them use mainly two sources for financing: general government contributions and social tax revenue. The aim of this paper is to study the development of the structure of social protection financing at the main contributor level over the last decade, defining the trends that characterize the changes. We concentrate on convergence analysis of the structure of social protection financing, which is an important but, so far, insufficiently studied issue. (JEL H55, H53, P52)

Introduction

EU member states make constant efforts to increase revenues to finance social protection. Social protection expenditures are financed from various sources, the most important of which, in most of the countries, is social tax revenue. It is extremely important to prevent the rise of tax rates in all countries where the main source of financing is social tax revenue. To cover the growing social protection expenditure, the structure of financing has been changed in the last decade, in which processing the share of government contributions have increased. In 1993, on average, 63.0% of the social protection expenditures in EU were covered from social tax revenue (contributions paid by employers and insured persons) and 32.8% from government contributions (public financing). In 2001, this ratio was 60.5% and 36.0%. The tendencies have been in different directions across countries.

This paper seeks to study the development of the structure of social protection financing at the main contributor level over the last decade, defining the trends that characterize the changes. We concentrate on convergence analysis of the structure of social protection financing, which is the most important part of social protection systems but a relatively stable area of social policy in EU countries. We study whether convergence or divergence has occurred in social protection financing structures in EU countries in the period 1993-2001, while the social protection expenditures have converged [Puss et al., 2003]. We analyze the presence of [sigma]-convergence, on the basis of linear and non-linear regression, the presence of absolute [beta]-convergence, and the speed of convergence in the structure of social protection financing in the EU.

Background Information

In the EU member states, social protection has been an area of national competency. European Community legislation has therefore, purposefully avoided harmonization of national social security legislation of Member States. The Charter of Fundamental Social rights of 1989 made reference to the principle of subsidiarity and thereby, recognized the Community as an actor in social security. Subsidiaries conditionally give the Community the competency to act if objectives set out have not been fulfilled in a satisfactory manner at the national level [De la Porte, 2000].

The Social Charter also opened the debate on the setting of common objectives of social policies, where policies are understood as the manner in which the social protection systems develop. The Commission was the initiator of this process and believed that by setting common goals, a convergence of policies of social protection would be reached [De la Porte, 2000]. At the end of 1990s, due to the multiple factors including the European employment strategy, aging of population, transformation of the macroeconomic environment in the adaptation to the EMU, and enlargement of the EU, social protection has become more important in the EU. Despite all these developments, the organization of the social protection systems remains an area of national competency. At the national level, the efforts to balance social protection resources and expenditure can be made. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Convergence Analysis of the Structure of Social Protection Financing
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.