1. State, market and civil society
Lecture 3

2. Welfare Triangle
State
Market
Civil socitey

3. Roles? Financing Delivery Impact on degree of solidarity
Logics and rationality behind
Change in welfare mix, the combination of state, market and civil society, over time – not a static issue. Care of children as an example – historically civil society – today often either market and/or state

4. Routes to welfare Public Fiscal Occupational
They can be used independently or in various combinations
Analysis often looks at one aspect – and data often mainly public welfare through direct public sector spending
In most welfare state public spending also imply sales of goods and services from the private sector and employment of people

5. Two case examples: Housing and pension
Housing: Public support for construction and/or renovation of building, housing benefit, tax-rebate on housing loans Pension: State pension, indirect support through the tax-system (lower payment of tax) for savings to pension purposes

6. From gross to net social spending

7. Market-failure Monopoly/duopoly
Risk of a limited supply if limited demand ( for example, services to people with disabilities)
Unemployment – and historically inflation
Externalities – pollution (negative), vaccination (positive)
Market failure is an argument for public sector intervention, but not necessarily public sector delivery
Intervention also in order to ensure efficiency – care of elderly as an example
Moral limits to what a market can provide – for example organs

8. Types of regulations Public delivery Use of taxes and duties
Ministerial order
Other types of regulation
Recommendation, best practices
Control

9. Marketization of welfare states
Different degree in the different welfare regimes – highest in Liberal, least in Nordic welfare states
When can market be used to provide welfare without negative implications for users?:
Many providers – be able to reduce or avoid cream-skimming
Reduced transaction costs
Complete transparence and full information

10. When is private market solutions cheaper than state solutions?
This might be due to one or several of the following reasons:
Wage level for the employed are lower than in the public sector
More effective ways of working
Management is better
Quality of services is reduced
Working environment with more worn-out employees – implies a risk for higher public sector spending at a later time

11. Government -failure
If the size of the public sector is greater than what is from a welfare perspective is efficient
Bureaucracy
Interest, pressure or lobby groups influence
The difficulty in steering and managing the public sector – the principal-agent problem

12. Relation between the public and private sector
Private sector delivers goods and services to the public sector
Income transfers are often used to buy products in the private sector
Demand from public sector helps to develops new products –for example – welfare technology
Delimitation public private is therefore not simple and clear

13. Civil society – and the risk of Voluntary failure
A question being: Is voluntary work supplementary or areplacement for public welfare
Risk in differences in who has access to and options for receiving welfare services if provided by civil society
Supply might be limited – and can quickly vanish
Transaction cost might arise
Welfare states demand for documentation – implies a conflict between professionals and voluntary workers
A need therefore to define where possible and where it is not
Number of voluntary people differs among welfare states

14. Role of the family Supply care and economy among a group of people
Historically many welfare issues regarding care and income transfers has been solved in the family
A new risk being the splitting up of families – and also that some might be in risk of not having anyone to discuss intimate matters with – especially for elderly people loneliness might also be a problem

15. Labour market Has a special role and function in welfare societies
They often are the main access to income and consumption possibilities
Social contact and relations can also be influenced hereby
Work is seen as an important element in order to have a high level of welfare (measured by GDP) in many countries
There is many and different types of labour market, divided due to geography, education and experience, and also different types of unemployment ( for example: season, business cycle, search)

16. Relation between unemployment and growth in GDP in the EU27 since 2000

17. Nordic welfare states and labour market
High employment rate - also for women
Historical a focus on reduction of unemployment – including through a reduction in unemployment also by public sector intervention
Women are to a larger degree than men working part-time
Gender divided labour market – and difference in wage income
Focus on active labour market policy – but to a larger degree than earlier on work-first

18. Labour market and welfare regimes – a comparison
Labour Market Policy / Welfare Regime
Coverage unemployment benefit
Focus on ALMP
Goal of labour market policy
Ideological approach
Nordic
Comprehensive –although replacement rate has been reduced
Yes - central
Integration, full employment
Equality, Keynesian intervention, however increased focus on work-first
Corporatist/Continental European
Less Strong – lower replacement rate
Relatively important
Reduce pressure public sector spending
State with corporatist inclusion labour market partner
Liberal
Weak
Only limited
If, then focus on business
Efficiency, liberal non-intervention
Southern/Eastern Europe
Very incomplete
Only weak developed
To reduce use of benefit system
Emphasis on civil society

19. High replacement in Nordic – low in Liberal – also some convergence
Country
Single
Two earner married couple
Czech Republic 65 84
Denmark 57 74
France 66 80
Germany 59 83
Hungary 54 73
Italy 55
Spain 58 75
Sweden 46 68 UK 13 49

20. Public welfare and the labour market
Day –care for children
Maternity and paternity leave
Education
However, also often either at the work place or in collective agreements possibilities and discussion on how to combine work and family life

21. Summing -up
State, market and civil society has different and changing roles and it differs among the different welfare state regimes
Consequences hereof can be difficult – and needs to be analysed empirical in the different countries
The balance between the three sectors can influence the degree of equality in a society – including inequality in access to welfare