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The Welfare State in EuropeEconomic and Social Perspectives$
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Pierre Pestieau and Mathieu Lefebvre

Print publication date: 2018

Print ISBN-13: 9780198817055

Published to Oxford Scholarship Online: September 2018

DOI: 10.1093/oso/9780198817055.001.0001

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Performance and Efficiency of the Welfare State

Performance and Efficiency of the Welfare State

(p.89) 8 Performance and Efficiency of the Welfare State
The Welfare State in Europe

Pierre Pestieau

Mathieu Lefebvre

Oxford University Press

One of the most widespread critiques levelled against the welfare state is its inefficiency. In this chapter we try to tackle the question of definition and measurement of the efficiency and the performance of the welfare state. We show that there exist clear inefficiencies in the distribution of services. Because of administrative complexity or fear of stigmatization, the neediest people can fall outside the protection of the welfare state. As far as the administrative cost of social insurance, a single public provider tends to be cheaper than a multiplicity of private firms. In the production of some services, there are clear efficiency slacks, but these do not depend on ownership—public or private. What seems to matter is competition and autonomy. Finally, we study the performance of the welfare state as a whole, abstracting from social spending. The results indicate a clear process of convergence among European countries.

Keywords:   best practice frontier, convergence, Matthew effect, productive efficiency, redistributive efficiency, performance

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