The Welfare State in the European Union: Economic and Social Perspectives

The Welfare State in the European Union: Economic and Social Perspectives

The Welfare State in the European Union: Economic and Social Perspectives

The Welfare State in the European Union: Economic and Social Perspectives


This book offers an account of the performance of the welfare state in the European Union, and explores its future prospects in an ever evolving setting. The objectives of the welfare state are twofold: to relieve poverty and to provide a sense of security for everyone. It can be shown thatover the last four decades the welfare state has been quite successful in achieving these objectives, more visibly in the Nordic countries than in the Southern or the Anglo-Saxon ones. But today the welfare state is at a crossroad. It is facing a variety of challenges that include demographic aging,the changing role of families, increased opportunism, economic integration and declining job security. All these challenges call for a drastic reform of the welfare state, one that requires more control of abuses and more accountability. The authors that it is crucial that all the components of thewelfare state be made as efficient as possible, and that if a choice has to be made between alleviating poverty and protecting individuals against lifetime risks, priority should be given to the first objective. This book devotes a chapter to each of the main social protection programs: healthcare, unemployment insurance, pensions and child policies. In addition, special consideration is given throughout to the necessary interdependence among the State, the market and the family.


The origin of this book goes back to the deep uneasiness I have felt since very early in my life as an economist. Increasingly squeezed between two contrasting views on social policy, I have experienced what the French call two 'pensées uniques.' According to the first view, market forces should be given priority over any considerations, be they social, cultural or political. On the other hand, the second view holds that objectives of equity and social cohesion have precedence over those of economic efficiency and growth. Given my training and my work in public economics, particularly in second-best social optimization, I find myself at odds with these two polar views. I suggest an intermediate and more balanced approach, one that simultaneously takes into account efficiency as well as equity considerations.

My vision of the welfare state, as expanded in this book, is the product of many contributions to my development. Many people have shared with me their aspiration for a world in which efficiency is pursued with constant concern for equity, and in which redistribution and poverty alleviation are achieved within a setting of allocative efficiency and economic growth. I am indebted to my teachers, Jacques Drèze and Joseph Stiglitz, who have infused in me their enthusiasm and insight to pursue a rigorous analysis of public sector economics. Likewise, I am grateful to a number of co-authors and friends with whom I have worked on the topics and ideas presented in this book: Maurice Marchand and Philippe Michel (both of whom have left us too early), Robin Boadway, Helmuth Cremer, Denis Kessler, André Masson, Sergio Perelman, Uri Possen.

I would also like to mention younger colleagues with whom I have worked over the years, and who have offered me a different point of view, that of another generation, with respect to the issues discussed here: Motohiro Sato, JeanMarie Lozachmeur, Georges Casamatta, Alain Jousten, Luc Arrondel, JeanPierre Vidal, Maria del Mar Racionero and Manuel Leite Monteiro. I have also benefited from visits to research centers that provided the environment ideal for big pushes in the progress of this book: the CES in Munich, the Mario Einaudi Center at Cornell University and the Research Department at the World Bank.

My thanks also go to Claudine Chmielewski, who provided expert secretarial support throughout the years, to Marianne David, who edited my typescript and improved its readability with dedication and talent, and to Mathieu Lefèbvre, who updated the statistical evidence up to the last minute.

Finally, I dedicate this book to my two children, Sophie and Daniel, trusting that they share my concern for justice and fairness.

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