Cite JOURNAL ARTICLE
Income Risk and Social Spending: Empirical Estimates
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 122 (2002), Iss. 3 : pp. 327–349
This paper uses panel data on developed countries to estimate simultaneous equations models of social spending. The methods take advantage of some recent innovations in the growth literature involving the treatment of country-level panel data. Another contribution is to treat income risk as an endogenous variable, as suggested by the recent theoretical work of Hans-Werner Sinn. The results indicate that social spending is moderately related to aggregate income variability, and strongly related to the share of elderly and unemployed.