Welfare Competition in Norway

Jorn Rattso and Jon Fiva

Working Paper Series from Department of Economics, Norwegian University of Science and Technology

Abstract: Local redistribution policy creates incentives for welfare migration that may result in 'underprovision' or even a 'race to the bottom'. This paper evaluates the empirical importance of welfare competition. Our contribution is to separate between the policy decision and the actual welfare benefit payments and to introduce income distribution as a determinant of welfare policy. Utilizing spatial econometric methods we find statistical significant strategic interaction between local governments for both the welfare benefit norm decided by the local council and the expected welfare benefits of a standardized person. No robust relationship is found between inequality and welfare benefits and thus we offer no strong support for the Romer-Meltzer-Richard hypothesis. We conclude that there is a geographic pattern in welfare benefits. This does not necessarily imply underprovision, since the grant financing of the local governments may generate overall excessive public spending.

JEL-codes: C21 D78 H73 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-06-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.svt.ntnu.no/iso/WP/2004/7jfjrejpesub.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nst:samfok:4204

Access Statistics for this paper

More papers in Working Paper Series from Department of Economics, Norwegian University of Science and Technology Contact information at EDIRC.
Bibliographic data for series maintained by Anne Larsen ().