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What Limits Social Spending? Export

Explorations in Economic History, Vol. 33, No. 1. (January 1996), pp. 1-34.

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political_economics

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The forces that are most likely to set the ultimate limits on social spending as a share of GDP are not those usually imagined. The deadweight costs of such spending, and the taxes behind them, fail to show the predicted upward spiral. The experience of 1960-1981 shows a major role for shifts in relative age-group sizes, but with an approaching sunset to the effect of aging on social-spending patterns. In addition, the further are the middle pre-fisc income ranks from the poor, the lower the political tendency to spend on any major type of social program.


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