BPEA | 2001 No. 2

Why Doesn’t the United States Have a European-Style Welfare State?

Alberto Alesina,
Alberto Alesina Nathaniel Ropes Professor of Political Economy - Harvard University
Bruce Sacerdote, and
Bruce Sacerdote Headshot
Bruce Sacerdote Richard S. Braddock 1963 Professor in Economics - Dartmouth College
Edward Glaeser
Edward Glaeser Fred and Eleanor Glimp Professor of Economics - Harvard University

2001, No. 2

EUROPEAN GOVERNMENTS REDISTRIBUTE income among their citizens on
a much larger scale than does the U.S. government. European social programs
are more generous and reach a larger share of citizens. European tax
systems are more progressive. European regulations designed to protect
the poor are more intrusive. In this paper we try to understand why.
The literature on the size of government is rich and varied. However,
here we do not focus on the size of government as such, but rather on the
redistributive side of government policies. Thus our goal is in one sense
narrower than answering the question, “What explains the size of government?”
since we focus on a single, but increasingly important, role of fiscal
policy. Yet in another sense our focus is broader, because redistributive
policies go beyond the government budget—think, for instance, of labor
market policies.