The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the Role of the State
Of the many functions of the welfare state, two are particularly prominent: the 'Robin Hood' function - the provision of poverty relief, the redistribution of income and wealth, and the reduction of social exclusion; and the 'piggy bank' function - ensuring mechanisms for insurance and for redistribution over the life cycle. The piggy-bank function, unlike the redistributive purpose of the welfare state, has received relatively little attention, and is not widely understood. This book redresses the balance. Nicholas Barr's central contention is that—-contrary to popular opinion—-the welfare state exists for reasons additional to poverty relief. These reasons - encapsulated by the piggy-bank function - arise out of pervasive problems of imperfect information, risk, and uncertainty. Even if all poverty and social exclusion could be eradicated, people would still need to insure themselves and to redistribute over the life cycle. As a result, Barr argues, the welfare state is here to stay, since twenty-first century developments do nothing to undermine these reasons. He also explores ways in which the welfare state can and will adapt to economic and social change, including specific, and sometimes novel, solutions. The analysis in "The Welfare State as Piggy Bank" is international, applying to advanced industrial countries, as well as addressing post-communist countries, and touching upon middle-income developing countries. Barr's approach is contemporary and forward-thinking. His discussion ranges over a number of topics of central relevance to life in the twenty-first century, including genetic screening and its impact on insurance; the convergence of private and social insurance; how to finance long-term care; pension reform in the light of fluid family structures and a mobile workforce; loans for financing investment in human capital; and new ways of involving private finance in tertiary education.
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The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the ...
N. A. Barr
Limited preview - 2001
actuarial administrative adverse selection argued argument assets benefits borrowing cent central choice competitive consumer consumption smoothing contrast contributions costs countries cover cream skimming debt discussed in Chapter earnings economic effects efficiency employer equity example face fees finance fiscal funded schemes genetic screening higher education human capital imperfect information incentives income income-contingent loans income-contingent repayments increase individual inefficient inflation information problems institutions interest rate investment issue labour mobility loan scheme market failures medical insurance medical spending ment moral hazard net present value OECD outcomes output PAYG scheme pension funds pension scheme pension spending person political poverty line poverty relief premium pressures private insurance private lenders private pensions public spending reduce reform regulation relevant result retirement risk saving Secondly Section social insurance Student Loans Company subsidy tertiary education tion transition tuition uncertainty universities welfare workers World Bank