Faculty Publications - School of Business

Document Type

Article

Publication Date

2011

Abstract

As governments continue to evolve over the past century or so in their perceived role of providing economic security for their populations, a ubiquitous yet ill-defined concept of the welfare state is increasingly taking center stage in political and economic debates. With fiscal crises looming over the horizon in many parts of the world, the fingers of blame point with greater frequency to the welfare state as the entity which is contributing more to fiscal problems than to economic solutions. Reformation of the welfare state is rapidly becoming more likely and more urgent and this study proposes one mechanism for evaluating welfare state performance and setting benchmarks for optimizing such performance. The study uses Data Envelopment Analysis to evaluate comparative efficiencies of various welfare state models in 137 countries, and to propose potential pathways to efficiency savings in the laggard efficiency states. The study contextualizes the welfare state efficiency differences by referring to the well-established welfare state typologies of 18 Organisation for Economic Co-operation and Development (OECD) countries. The results are consistent with previous findings in identifying the lower spending states as generally more efficient and finding the social-democratic welfare state model less efficient. The results are qualified by the recognition that definitional and data availability issues remain to be solved by future studies, as many of the ideal variables for welfare state performance measurement do not exist at this time.

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