Arbeitspapier
Baumol's cost disease and the sustainability of the welfare state
If productivity increases more slowly for services than for manufactured goods then services suffer from Baumol's cost disease and tend to become relatively more costly over time. Since the welfare state in all countries is an important supplier of tax financed services, this translates into a financial pressure which seems to leave policymakers with a trilemma; increase taxes (and hence tax distortions), cut spending or redistribute less. Under the assumptions underlying Baumol's cost disease, we show that these dismal implications are not warranted. The welfare state is sustainable and Baumol growth leaves scope for Pareto improvements.
- Language
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Englisch
- Bibliographic citation
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Series: EPRU Working Paper Series ; No. 2015-02
- Classification
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Wirtschaft
- Event
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Geistige Schöpfung
- (who)
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Andersen, Torben
Kreiner, Claus Thustrup
- Event
-
Veröffentlichung
- (who)
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University of Copenhagen, Economic Policy Research Unit (EPRU)
- (where)
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Copenhagen
- (when)
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2015
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Andersen, Torben
- Kreiner, Claus Thustrup
- University of Copenhagen, Economic Policy Research Unit (EPRU)
Time of origin
- 2015
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