The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the Role of the StateOf 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. |
Contents
Introduction | 1 |
The Welfare State and its Objectives | 4 |
Economic Theory | 9 |
The Market and Information | 11 |
Insurance | 31 |
The Mirage of Private Unemployment Insurance | 33 |
Problems with Medical Insurance | 50 |
TwentyFirstCentury Insurance Issues | 72 |
Core Issues in the Economics of Education | 161 |
Information Problems | 171 |
Designing Student Loans | 179 |
The Options | 191 |
TwentyFirstCentury Education Issues | 223 |
Introduction to Part 5 | 239 |
The Welfare State in a Changing World | 263 |
TwentyFirstCentury Insurance Issues | 270 |
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Common terms and phrases
actuarial administrative adverse selection argued argument arrangements assets Barr borrowing cent central Chile choice competitive consumer consumption smoothing contrast contributions costs countries cream skimming debt defined-benefit demographic discussed in Chapter earnings economic effect efficiency employer equity example face finance fiscal funded schemes genetic screening guarantee higher education human capital imperfect information incentives income-contingent loans income-contingent repayments increase individual inefficient inflation information problems institutions interest rate investment issue labour mobility Latvia learning accounts loan scheme London market failures medical insurance ment moral hazard mortgage-type OECD output PAYG scheme pension funds pension scheme pension spending person political poverty line poverty relief premium pressures private lenders private pensions public spending reduce repay result retirement risk Secondly Section social insurance Social Security strategy Student Loans Company subsidy tertiary education tion transition uncertainty unemployment universities welfare workers World Bank