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Chapter Chapter Market Innovations to Better Allocate Generational Risk

Salvador Valdés‐Prieto

in Restructuring Retirement Risks

Mandatory old-age benefit programs tend to require periodic adjustments as a result of demographic and economic shocks. However, such discretionary adjustments create political risk for workers and ... More

Mandatory old-age benefit programs tend to require periodic adjustments as a result of demographic and economic shocks. However, such discretionary adjustments create political risk for workers and beneficiaries, and raises taxpayer risk. An alternative way to handle such shocks is to use rule-based adjustment, which can be adopted in an unfunded system without incurring transition costs and without increasing public debt. This chapter explores an approach to this problem that would endow the Social Security Trust Fund with property rights over the revenue of a (much reduced) residual payroll tax paid by future workers. This revenue would be securitized and the resulting securities priced in financial markets. The new securities created in the process would allow beneficiaries to obtain safe real pensions protected from investment risk.Less

The Impact of Adjustment-Related Social Funds on Income Distribution and Poverty

Giovanni Andrea Cornia and Sanjay G. Reddy

in Inequality Growth and Poverty in an Era of Liberalization and Globalization

Most poverty and income inequality has deep‐rooted causes that can be removed only by structural (and often slow) interventions, although it is now increasingly evident that structural adjustment, ... More

Most poverty and income inequality has deep‐rooted causes that can be removed only by structural (and often slow) interventions, although it is now increasingly evident that structural adjustment, premature financial liberalization, and uncontrolled globalization can exacerbate poverty by inducing protracted recessions and macroeconomic instability. One of the dominant responses to these policy‐induced problems has been the establishment of temporary social safety nets, of which the most popular type is known as ‘social funds’; these have become a prime policy choice for offsetting the social impact of policy reform. This chapter assesses the performance of social funds, arguing that have played a minor role in containing the social costs arising from liberalization policies and in reducing the number of unemployed, ‘adjustment poor’, and ‘chronic poor’. In addition, the emphasis placed on short‐term social funds may have diverted resources and the attention of policy‐makers from the extension and reform of standing social security arrangements that may more effectively address both chronic and adjustment‐induced poverty. The six sections of the chapter are: Introduction; The Historical Context Leading to the Mass Introduction of Social Funds; Adjustment‐Related Social Funds: Scale, Scope, and Structure; Effects on Incomes, Income Distribution, and Poverty: Macroperspective; Effects on Incomes, Income Distribution, and Poverty: Microperspectives; and Conclusions and Recommendations.Less

Employment

Mark Bell

in Racism and Equality in the European Union

This chapter examines EU law and policy in the field of employment and considers the extent to which they reflect the objectives of combating racism and promoting ethnic equality. It examines EU ... More

This chapter examines EU law and policy in the field of employment and considers the extent to which they reflect the objectives of combating racism and promoting ethnic equality. It examines EU employment legislation, such as that on worker participation. In the policy sphere, it looks at the European Employment Strategy and the European Social Fund. It concludes that issues of racism find their way onto the agenda with more ease in new governance processes; however, their fluidity means that the issue can subsequently fall off the agenda at a later stage.Less

The Marginal Social Cost of Public Funds

Chris Jones

in Applied Welfare Economics

In public economics applications, the MCF is frequently used to compute the cost to private surplus of raising an additional dollar of government revenue. One of the most common examples is provided ... More

In public economics applications, the MCF is frequently used to compute the cost to private surplus of raising an additional dollar of government revenue. One of the most common examples is provided by the revision to the Samuelson condition that follows the approach recommended by Pigou (1947). The MCF is rarely used in the applied welfare literature to compute shadow prices. By doing so in this chapter, it is possible to demonstrate the separate, but related roles of the MCF and the shadow value of government revenue. While the MCF is the cost to private surplus of transferring a dollar of revenue to balance the government budget, the shadow value of government revenue is the change in social welfare from endowing another dollar of revenue on the government. Thus, the MCF is the welfare effect of transferring given resources between the private and public sectors of the economy, while the shadow value of government revenue is the welfare effect of expanding the economies’ resources. That is why the shadow value of government revenue, and not the MCF, converts efficiency gains into utility. The relationship between the MCF and the shadow value of government revenue is used to reconcile different measures of the MCF used in the public economics literature.Less

The Optimal Provision of Public Goods

Chris Jones

in Applied Welfare Economics

Government provision of a pure public good is a popular application in public economics because it combines public spending and taxation in a single project. This chapter uses shadow pricing rules ... More

Government provision of a pure public good is a popular application in public economics because it combines public spending and taxation in a single project. This chapter uses shadow pricing rules developed in previous chapters to obtain the Samuelson (1954) condition for the optimal provision of pure public goods. The effects of distorting taxation are included by using the revised shadow prices in Ch. 6 to obtain a revised Samuelson condition, and the distributional effects are included using welfare analysis in Ch. 7. The generalized Hatta decomposition is used to show why income effects do not impact on the Samuelson condition in a single (aggregated) consumer economy. Finally, Lindahl prices are obtained for government-provided public goods when prices and incomes change endogenously in a general equilibrium setting.Less

Doorstep moneylending since the 1950s

Sean O'Connell

in Credit and Community: Working-Class Debt in the UK since 1880

This chapter explains the success of companies such as Provident Financial and Cattles (both members of the FTSE 250 by the 1990s). Their agents serviced the growing sub-prime sector and ... More

This chapter explains the success of companies such as Provident Financial and Cattles (both members of the FTSE 250 by the 1990s). Their agents serviced the growing sub-prime sector and commercialized backstreet feminized affectual relationships between borrowers and lenders. The extent to which their success was dependent on the decline of pawnbroking and mail order agency (and the limitations of the government's Social Fund) is explained. The motivations and limited options of moneylenders' customers are explored as are accusations of ‘predatory lending’ and exploitation. Moneylenders fought PR battles to exclude themselves from the label ‘loan shark’, as images of criminal moneylenders increasingly replaced ones of ‘Shylocks’. The chapter examines the role of violent loan sharks, explaining their small but significant market. Particularly important was the fact that government resisted calls for interest rate caps because it feared legal lenders would abandon their riskiest borrowers, leaving them vulnerable to loan sharks.Less

Modes of Governance and Regulatory Techniques

Mark Freedland, Paul Craig, Catherine Jacqueson, and Nicola Kountouris

in Public Employment Services and European Law

This chapter analyses the various instruments that shape and regulate public services in Europe, with a particular focus on those instruments affecting social public services and employment services. ... More

This chapter analyses the various instruments that shape and regulate public services in Europe, with a particular focus on those instruments affecting social public services and employment services. It is suggested that public services, and employment services in particular, are placed in the midst of an extremely complex regulatory web composed by both traditional, hard law, instruments and by more reflexive and soft forms of regulation, ranging from policy Guidelines elaborated within the OMC framework, to funding arrangements provided by the European Social Fund. Crucially, this regulatory web is both woven at a supranational level and at a national and, sometimes, sub-national level and is inspired by both social and economic concerns. A visible trend is the growing role played by private and contractual modes of regulation, most obviously in the relationship between public services, private contractors/providers, and individual users.Less

Deficits and Debt

Maurice Wright

in Japan's Fiscal Crisis: The Ministry of Finance and the Politics of Public Spending, 1975-2000

In 1978, Japan adopted the new System of National Accounts (SNA) which it integrates five major consumption accounts of the national economy, of which the income and outlay accounts for various ... More

In 1978, Japan adopted the new System of National Accounts (SNA) which it integrates five major consumption accounts of the national economy, of which the income and outlay accounts for various institutional sectors include those for ‘General Government’. This concept provides a common framework and criteria by which to measure, assess, and compare national and international fiscal and financial performance. It includes all producers providing but not selling government services to the community in three main categories: central government, local government, and social security funds. Using General Government, this chapter analyses the trends of spending in those three categories in Japan throughout the period 1975–2000 and compares Japan's fiscal performance with other G7 countries. There are three main performance indicators of General Government: outlays, fiscal balance, and the balance of assets and liabilities (gross and net debt). The results from using them are compared with those obtained by applying the Ministry of Finance's own preferred narrower definition of fiscal balance and debt, which excluded social security funds and included the accounts of public corporations.Less

Problems

Chris Jones

in Applied Welfare Economics

This chapter provides a set of questions drawn from material presented in previous chapters. Most are designed to emphasize important points, and to illustrate practical examples of applied welfare ... More

This chapter provides a set of questions drawn from material presented in previous chapters. Most are designed to emphasize important points, and to illustrate practical examples of applied welfare analysis. A number of questions are quite long and are intended as assignments, while others are more suitable for tutorial exercises.Less

From Humanitarian Assistance to Poverty Reduction in Angola

MÁrio Adauta De sousa, Tony Addison, BjÖrn Ekman, and Åsa Stenman

in From Conflict to Recovery in Africa

This chapter discusses how to focus public policy on poverty reduction during wartime and in peace. It begins by discussing poverty and income inequality in Angola. It then discusses the need for ... More

This chapter discusses how to focus public policy on poverty reduction during wartime and in peace. It begins by discussing poverty and income inequality in Angola. It then discusses the need for firm priorities to direct resources to their best uses in poverty reduction. It then examines Angola's social fund, an initiative that has responded to community needs in a way that holds lessons for reforming the state bureaucracy. It concludes by highlighting the relationship between regional inequalities and conflict and the need to rebuild confidence in Angola's institutions.Less

The cost of care if you don’t own your home

Glenda Roberts

in Local Authorities and the Social Determinants of Health

This chapter addresses the complex set of issues when a person does not own their home. It has been acknowledged and debated for a long time that the social care funding system is not fit for ... More

This chapter addresses the complex set of issues when a person does not own their home. It has been acknowledged and debated for a long time that the social care funding system is not fit for purpose, and in its current form is untenable both monetarily and politically. The focus of the funding debate continues to be on those individuals who do own their own home and how they make a valuable contribution to maintaining the current system. There is consideration that this system is unfair on individuals who are deemed to have provided for their future, but little consideration of the implications for individuals who, whether through choice or circumstance, have no assets to use towards the cost of their care. Despite one in four people over the age of 75 not owning their own home, they have been largely ignored as part of the deliberations. Disappointingly, the interpretation of what is fair seems based on what can be contributed in financial terms. Unfairness should also be measured morally and ethically: people who do not own their own home also face an unfair system, one of limited choice and delayed access to care.Less

Social and employment policies in Europe from a multilevel perspective

Katharina Zimmermann

in Local Policies and the European Social Fund: Employment Policies across Europe

Chapter 2 discusses the characteristics of and the relationship between European and local social and employment policies. It starts with an overview on EU cohesion policy and characterises the ESF ... More

Chapter 2 discusses the characteristics of and the relationship between European and local social and employment policies. It starts with an overview on EU cohesion policy and characterises the ESF as a specific governance tool which nowadays combines financial, programmatic and procedural aspects in a unique manner. In a second step, the chapter discusses the crucial role of the local level in current activation policies. Chapter 2 argues that the local level deserves specific attention and should not be subsumed under national welfare systems. Furthermore, the streamlined EU cohesion policy and particularly the ESF establish a stronger direct link between the European and the local level and confront local actors with new opportunities and challenges.Less

A New Era of Church-State Cooperation

in God's Economy: Faith-Based Initiatives and the Caring State

In 1996, the U.S. Congress passed a set of provisions known as “charitable choice,” part of the landmark welfare reform bill signed by President Bill Clinton that year. Charitable choice allowed ... More

In 1996, the U.S. Congress passed a set of provisions known as “charitable choice,” part of the landmark welfare reform bill signed by President Bill Clinton that year. Charitable choice allowed religious social-service providers a statutory right to contract with the government without compromising their religious identity. The Faith-Based and Community Initiative (FBCI) of the administration of President George W. Bush was based on the core legal principles of charitable choice. This chapter examines the faith-based initiative and its two goals: to increase the share of federal social welfare funding going to faith-based groups and to insure the institutional autonomy and religious identity of participating faith-based providers. The faith-based initiative was implemented by the White House with mixed results over Bush's two terms. This chapter discusses what happened under Bush and considers the legislative and legal developments that preceded the launching of the FBCI. It also describes the church-state relations which moved away from strict separationism to cooperation, giving rise to a new church-state order.Less

Beyond numbers: Using case study insights to support interpretation

Katharina Zimmermann

in Local Policies and the European Social Fund: Employment Policies Across Europe

Chapter 7 takes up the formal results from chapter 6 on the contextual settings behind the three response-patterns and discusses them in light of case-knowledge. Here, more in-depth insights on the ... More

Chapter 7 takes up the formal results from chapter 6 on the contextual settings behind the three response-patterns and discusses them in light of case-knowledge. Here, more in-depth insights on the contextual conditions illustrate on the basis of the empirical material how the different conjunctions of conditions unearthed in chapter 6 work in practice. For instance, it is shown how local actors in some cases perceive the ESF as a burden due to high co-financing and administrative overload, how in other local cases actors are attracted by the conceptual freedom of the funding, or how usage of the ESF becomes normalised in the context of public interventions in some cases. Chapter 7 uses the insights from the case studies to unravel the broader empirical pictures behind the contextual settings of the three response-patterns.Less

Changing the Rules of the Game to Build the European Economy

Jason Beckfield

in Unequal Europe: Regional Integration and the Rise of European Inequality

This chapter describes the development of the European political economy since the 1957 Rome treaty. It uses econometric and historical case evidence to build the argument that European integration ... More

This chapter describes the development of the European political economy since the 1957 Rome treaty. It uses econometric and historical case evidence to build the argument that European integration has advanced both from the top down and from the bottom up. The first part presents several measures of European integration to address the question of how we know integration when we see it. The second part describes two mechanisms of integration: redistribution from the top down via the European Social Fund, and integration from the bottom up through the formation of the Euro-Regions. The third part describes the development of a convergent European economy, where macroeconomic differences have been reduced through European integration, especially before the 1980s, and especially if economies are weighted by their populations.Less

Services and Surveillance: Welfare, the Police, and the Algerian War

Amelia H. Lyons

in The Civilizing Mission in the Metropole: Algerian Families and the French Welfare State during Decolonization

This chapter analyzes the expansion of welfare services after the Fourth Republic collapsed in 1958 and De Gaulle implemented a two-pronged solution to the Algerian war. Alongside the expansion of ... More

This chapter analyzes the expansion of welfare services after the Fourth Republic collapsed in 1958 and De Gaulle implemented a two-pronged solution to the Algerian war. Alongside the expansion of military and police operations—which resulted in intense bloodshed—the Fifth Republic emphasized its benevolent development project to save French Algeria. By examining the Constantine Plan in Algeria and the Social Action Fund in the metropole, chapter 5 assesses the politics of services in France and Algeria during the final years of the war. Welfare providers’ actions defied simple characterization; some participated directly in state-sponsored violence while others became eloquent and persistent critics of repression. Yet, even the ardent critics continued to fashion themselves as Algerians’ guardians and believed Algerian nationalism impeded Algerians’ inclusion in French society.Less

The Great “Hope”: Housing Algerian Families at the Height of the Algerian War

Amelia H. Lyons

in The Civilizing Mission in the Metropole: Algerian Families and the French Welfare State during Decolonization

Chapter 6 examines housing policy for Algerians at the end of the war. First, it analyzes the 1959 decision to “liquidate” the bidonvilles. Clearing these shantytowns required a massive investment in ... More

Chapter 6 examines housing policy for Algerians at the end of the war. First, it analyzes the 1959 decision to “liquidate” the bidonvilles. Clearing these shantytowns required a massive investment in family housing between 1959 and 1962, much of which came from the Social Action Fund. Even though worker-housing construction continued, family housing provided a more visible demonstration of the state’s commitment to help Algerians and its effort to shape and monitor Algerians’ behavior. Housing families became a two-step process. First, ‘un-evolved’ families received training in transitional housing projects—mobile home parks where families received gender appropriate educational preparation for life in France. If women responded well to the transformation, social workers decided they could live in HLMs. Yet, few families moved into HLMs even though the welfare network built dozens of complexes. Instead, metropolitans and escaping French colonists moved into apartments earmarked for Algerians.Less

What responses under what conditions? Formal qualitative comparative analyses and preliminary interpretations

Katharina Zimmermann

in Local Policies and the European Social Fund: Employment Policies Across Europe

Chapter 6 unravels the contextual conditions enabling the three different response-patterns – 1) no usage, no change. 2) usage without change, and 3) usage and change – described in the previous ... More

Chapter 6 unravels the contextual conditions enabling the three different response-patterns – 1) no usage, no change. 2) usage without change, and 3) usage and change – described in the previous chapter. The chapter presents in a fist step the results of formal QCA-analyses, which reveal a number of relevant conditions both for usage (e.g. administrative capacity or political stability), and for change (e.g. cognitive engagement or public support structures). The results are then summarised in a preliminary typology of local responses to the ESF, describing specific contextual settings for each of the three patterns.Less

What Right Looks Like: The National Social Security Fund

William J. Norris

in Chinese Economic Statecraft: Commercial Actors, Grand Strategy, and State Control

This chapter examines the National Social Security Fund (NSSF) as a potential instrument of Chinese economic statecraft. More specifically, it considers the factors that make the NSSF unlikely to be ... More

This chapter examines the National Social Security Fund (NSSF) as a potential instrument of Chinese economic statecraft. More specifically, it considers the factors that make the NSSF unlikely to be a source of strategic concern by focusing on its institutional and structural characteristics as well as its investment activities. The chapter begins with a historical overview of the NSSF, followed by a discussion of the NSSF's financing sources and uses. It then reviews the NSSF's mandate and activities before evaluating how the theory applies to the case of the NSSF. It suggests that the NSSF has little potential as an effective tool of China's economic statecraft owing to its institutional structure.Less