24 January 2011

Women and Welfare

The blog Kids Prefer Cheese offer the abstracts of two technical papers addressing the relationship between women and the welfare state:

Women Prefer Larger Governments: Growth, Structural Transformation, and Government Size
Tiago Cavalcanti & José Tavares
Economic Inquiry, January 2011, Pages 155–171
Abstract: The increase in income per capita is accompanied, in virtually all countries, by two changes in economic structure: the increase in the share of government spending in gross domestic product (GDP), and the increase in female labor force participation. We argue that these two changes are causally related. We develop a growth model based on Galor and Weil (1996) where female participation in market activities, fertility, and government size, in addition to consumption and saving, is endogenously determined. Rising incomes lead to a rise in female labor force participation as the opportunity cost of staying at home and caring for the children increases. In our model, higher government spending decreases the cost of performing household chores, including, but not limited to, child rearing and child care, as in Rosen (1996). We also use a wide cross-section of data for developed and developing countries and show that higher market participation by women is positively and robustly associated with government size. We then investigate the causal link between participation and government size using a novel unique data set that allows the use of the relative price of productive home appliances as an instrumental variable. We find strong evidence of a causal link between female market participation and government size. This effect is robust to the country sample, time period, and a set of controls in the spirit of Rodrik (1998).
Historical Trust Levels Predict the Current Size of the Welfare State
Andreas Bergh & Christian Bjørnskov
Kyklos, February 2011, Pages 1–19
Abstract: Despite the fact that large welfare states are vulnerable to free-riding, the idea that universal welfare states lead to higher trust levels in the population has received some attention and support among political scientists recently. This paper argues that the opposite direction of causality is more plausible, i.e. that populations with higher trust levels are more prone to creating and successfully maintaining universal welfare states with high levels of taxation where publicly financed social insurance schemes. The hypothesis is tested using instrumental variable techniques to infer variations in trust levels that pre-date current welfare states, and then using the variation in historical trust levels to explain the current size and design of the welfare state, and finally comparing the explanatory power of trust to other potential explanatory factors such as left-right ideology and economic openness. To infer variation about historical trust levels, we use three instruments, all used previously in the trust literature: the grammatical rule allowing pronoun-drop, average temperature in the coldest month and a dummy for constitutional monarchies. Using cross-sectional data for 77 countries, we show that these instruments are valid and that countries with higher historical trust levels have significantly higher public expenditure as a share of GDP and also have more regulatory freedom. This finding is robust to controlling for several other potential explanations of welfare state size.

It really shouldn’t come as a surprise that cultural decline is accompanied by an increase in the nanny state.  Women generally avoid taking risks, something that was well-understood by the patriarchy of old.  If a woman were to pursue an alpha cad, back in the day, she knew that there was a strong probability that he would use her and leave her (“pump and dump” in the modern vernacular), and she would basically be left as nothing, since fornication was largely frowned on back in the day, and she would have little market value, except to be used by another alpha cad.

Thus, seeking alpha cads was a highly risky venture for women.  The safer option was to marry a beta.  You would be financially supported by a husband in exchange for keeping the home, among other duties.  This was a very safe route, and made for a stable society.

And then welfare came along.  The social safety net was started in the ‘30s, and in full force by the ‘60s.  The welfare state, much like the recent bailouts, has had the effect of eliminating moral hazard.  In this case, women feel free to pursue alphas because they know that there is little downside.  If the alphas love them and leave them, Uncle Sam will step and pick up the tab (in this sense, Uncle Sam is the ultimate beta).  It should come as no surprise that as the government has picked up the tab for women’s risks, women have engaged in more risk.  If you subsidize something, you will get more of it.

The solution, then, is to hit women where it hurts most: their purse.  Eliminate the nanny state, and you will solve a good portion of the problems that have arisen since the introduction of the nanny state.  It should be noted, though, that as the problems did not appear overnight, so too will they not disappear overnight.

1 comment:

  1. I love how it seems today women simply work to pay the extra taxes to pay the government to take care of the children.