SFB 823 Inattentive voters and welfare - state persistence
نویسنده
چکیده
Welfare-state measures often tend to persist even when they seem to have become suboptimal due to changes in the economic environment. This paper proposes an information-based explanation for this welfare-state persistence. I present a structural model where rationally inattentive voters decide upon implementations and removals of social insurance. In this model, welfarestate persistence arises from disincentive e¤ects of social insurance on attentiveness. The welfare state crowds out private nancial precautions and with it agentsattentiveness to changes in economic fundamentals. When welfare-state arrangements are pronounced, agents realize changes in economic fundamentals later and reforms have considerable delays. Keywords: welfare state, voting, imperfect information JEL classi cation: D72, H55, D83
منابع مشابه
The Research Institute of Industrial Economics
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