KMID : 1001320140410040351
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Social Welfare Policy 2014 Volume.41 No. 4 p.351 ~ p.376
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The Effects of Changed Social Expenditure Structures on Income Distribution and Economic Performance
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Byu Young-Woo
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Abstract
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This study explores the effects of changed social expenditure structures on income distribution and economic performance, using a structural equation model on panel data of 1990-2007 years from 27 OECD nations. Since the panel data may violate the basic assumptions of OLS, this study has used first-difference and PLS methods to estimate the structural equation model. First of all, according to the results of this study, the expenditures of social security areas have a positive impact on income distribution which is composited of the Gini Index and relative poverty rates, but a negative impact on economic performance with women employment rates, birth rates, youth employment rates, and real economic growth rates. Secondly, the increased expenditures of social investment areas have raised economic performance and have improved income distribution. Third, the interaction term between social investment and social security expenditures have a more powerful effect on economic performance than social investment expenditures do alone. In conclusion, it is possible that productive social policies based on social investment contribute to economic performance and establish a positive circulation structure of welfare and production. Ultimately, a social investment policy may help the sustainability of a welfare state.
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KEYWORD
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social security expenditure, social investment expenditure, income distribution, economic performance, structural equation mode, PLS
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