AØKA08187U Economics of Welfare

Volume 2015/2016
Education

Elective at BSc in Economics
Elective at MSc in Economics

Content

Most western countries are welfare countries with a high income per capita, and a relatively equal distribution of the income in a well-developed democracy. The governments and parliaments have not handed over the distribution of the income to the market alone, but have taken over both in order to obtain another distribution but also to prevent or repair market failures. In Denmark where the welfare thought/idea is widespread the public sector is large and it takes care of the distribution of 50% of the economy. By that a trade-off is arisen between the wish to obtain social justice and the demand for economic efficiency. This is the main theme in the social welfare policy. Will the welfare state survive and how will it get through the global financial crisis? And how will welfare states behave and how will they be structured on the other side of the global economic crisis?

We will look further on the great reform in the last 10-15 years – which has changed the attitude towards and the view on welfare.

The social welfare policy is undergoing remarkable change in the 21’ century. Within the 20’ century the transition in the welfare system took place – from classical capitalism to modern welfare economy, a mixed economy in a market with a large public sector. Now the western market is facing the challenge from the globalization, demography – with the prospect of lack of labor forces and increase in the senior part of the population. In Denmark the senior part of the population (over 60 years) is increasing from today 20% to 30” in 2050. But countries as Spain and Italy will reach as high as 40% and there over. In Denmark the welfare accord 2006 and 2011 will result in later retirement age and public pensions.

The aim for the course is therefore to apply insight in the theories behind the welfare policy. To illuminate the structure and the meaning of the welfare policy today. And by this insight to be able to analyze the challenges that the society and in the social policy, are facing in this century.

The curriculum is split up in 7 themes/subjects.

3 main themes:

A I    The Social Welfare challenge of the future economy

A II   The Theory of Social welfare

A III  The current and historical ideological basis for the social welfare state

And 4 special themes/subjects:

B I    Economic distribution, redistribution, poverty and disintegration. A sub-theme of this curriculum is immigration, integration and fiscal sustainability.

B II    Pension and retirement

B III   Flexicurity, Incentive structure of the Danish Labor market

B IV   State, Market, And civil society.

Tools:

During the course the students will learn to use a lot of instruments and tools. In the theoretical part of the course we will go through important social and welfare theories from the classical liberalism over libertarians to Maxis and Utilitarianism and the ideas behind new deal in USA – 1930’ crisis thinking, in Denmark about the rationality behind the current Danish welfare model – and also the different theoretical and political implications. We will also use tools to calculate equal and unequal – Gini coefficients, simple actuarial models, and models to analyze tradeoff between social justice and economic efficiency. 

Learning Outcome

One of the most important aspects of the western countries economy and structure of the society are that they are welfare states. Denmark is a leading country with regard to welfare. This course aim is to study these aspects in these countries. The social policy and the welfare policy will be under severe challenges.

The demographic development is the biggest challenge in the future macroeconomic milieu in the vest. It is challenging the whole structure and design in the current welfare system. All societies will be influenced by the increasing ageing, but also by the globalization, and the increasing individualism, which will place great demands on the structure of the social policy. The course Economics of welfare will contain main elements of analysis on the future sustainability of the economy.

Equality is the lifeblood of the welfare strategy – this aspect will be analyzed in respect of the impact on economic growth.  

Achieved competence after the course:

It will be expected of the students – finishing this course – that they will be qualified to be able to administrate economic and political analyzing functions, on a fair level in both the public and private sector. Some students could be employed in analysis functions/jobs in research units or units of analysis, other students in this course can be employed in international as well as national – regional or in municipalities – as well as in private companies, banks, insurance and in pension funds, and voluntary institutions, and social, humanitarian associations and NGO’s who are working with social welfare, social conditions or pensions.

Aim for the course: Economics of welfare:

Within the welfare policy the students will analyze and understand the consequences of the different social welfare political models and at the same time analyze a long row of macroeconomic consequences.

To obtain highest grade at the exam the students (when they have understood, finished, and read the course) are expected to master the following:

  • Be able to analyze and understand the different outcome of institutional solutions on the background of different historical decisions, and analyze the economic consequences, which are connected with changes in the system (in Denmark amongst other countries). And understand and analyze the structure of the Danish Welfare state today.

  • To obtain a thorough knowledge of social welfare theory, and its central economic theoretical ground ideas. This includes understanding the trade-off between social justice and economic efficiency, and when it is optimal to provide private insurance benefits, versus state intervention. Finally, required an elementary knowledge of the DREAM-model.

  • To be able to analyze differences and inequalities between different segments in the population. The student should be able to understand and analyze the concept of poverty, disintegration and the economic diversion between rich and poor, between generations and the life circle hypothesis.

  • Be able to understand and calculate elementary economics and statistical sizes in basic demography and be able to recognize and understand the economic model for “generational accounting” and to use this model in relevant countries.

  • Be able to understand and analyze the actuarial technique behind pension schemes. Understand and analyze “the five financial sources” impact on different goals and be able to work with different models on labor supply and the influence on retirement from the labor market (the neo classic and the pull, push jump theory)

  • To be able to understand, and analyze social welfare policy and its many alternative solutions in the market, in the public welfare, and in the civil society.

Curriculum:

Nicolas Barr: Economics of the welfare state, Oxford University Press, 2012, p. 16-251 (Barr 12)

Bjarne Hastrup: The social contract between the generations, Mulitvers 2008, p.17-79, p. 93-129, p. 166-260, p.262-291 (BH08)

Bjarne Hastrup: Social Welfare – The Danish Model, Mulitvers 2011, p.76-218, p. 230-247, p. 259-272, p. 438-448 (BH11)

OECD: Growing unequal? Income, Distribution, and poverty in OECD Countries, OECD 2008 p. 23-223, 281-307(OECD 08)

OECD: Working Paper no. 163 2014 Trends in income – inequality and its impact on economic growth (OECD 14)

DREAM rapport, August 2014 Long term economic projection 2014, English edition p. 1-90 (Dream 14)

DORS, English summery, Autumn 2014 and fall 2009, (20+25P)

Poul Schou immigration integration and Fiscal sustainability, journal of population economics, October 2005 (21P) (PS 05)

Actuarial calculations – Bjarne Hastrup, 2012 – (10P) (BH12A)

Private or public production note Bjarne Hastrup, 2012  (12P) (BH12B)

Optional readings:

Bjarne Hastrup, Den sociale velfærd I Danmark på bagrund af to udgivelser om dansk velfærdshistorie i Nationaløkonomisk tidsskrift (2010 Danish with an English abstract)

Flexicurity and beyond – finding a new agenda for the European social model. Henning Jørgensen and Per Kongshøj Madsen (EDS) DJØF publishing 2007 (English)

The politics of social solidarity – Peter Baldwin, Cambridge Univesity Press 1990 (English)

The new politics of the welfare state – Paul Pierson – Oxford University press, 2002 (English)

Oxford Handbook of Pensions and Retirement Income – Gordon L. Clark, Alicia H. Munnell, J. Michael (2006) (English)

The Handbook of West European Pension Politics – Ellen M. Immergut, Karen MM. Anderson, Isabelle Schulze (English)

Ageing and Employment policies, OECD 2005 (English)

DLFS –The Danish Longitudinal Future Study, Oxford Institute of Ageing 2007

Velfærdskommissionens slutrapport (2006) (Only in Danish)

Verdens Danmark, Bjarne Hastrup, Multivers 2006 (Only in Danish)

Contemporary Danish Society, Bjarne Hastrup, 1995 (English)

Danmarks Statistisk befolkningsprognose (Statistisk årbog) (Only in Danish)

UN’s Demographic Prospects 2050 (English)(2001)

The welfare state typologies,

Denmark in a comparative perspective

Walter Korpi (2002) P. 9 – 71 (W.K 02) (Only in Danish)

Axel Mossin, The Social policy and the welfare state policy, note 86 (Only in Danish)

DØR December 2006 May – November 2010 (in Danish with English summary)(Lastest issue – Summary)

Why we need a new welfare state, Gøsta Esping-Andersen, Oxford University Press, 2003 (English)

Sociale ydelser Hvem, hvad og hvornår?

Værd at vide 2011, Munksgaard, Ældre Sagen 2011 (Only in Danish) (Latest issue)

Indkomster 2008, Danmarks Statistik (2010) (Income in 2008) (Only in Danish)

Socialforskningsinstituttet (SFI) 2002, Fordeling af velfærd i Danmark (distribution of welfare ind Denmark)

Martin Feldstein and Jeffrey B. Liebman, The distribution of social security, the University of Chicago Press 2002 (English)

Jan Plousing, Velfærdsstat og socialpolitik, Handelshøjskolens forlag, 2004 (welfare state and social policy) (Only in Danish)

Befolkningens bevægelser, Danmarks Statistik (Latest edition)(Only in Danish)

Ageing Health and productivity, The Economics of increased life expectancy. Pietro Garibaldi, et, al. Oxford University Press, 2010

L. J. Kotlikoff, A.J. Auerbach amongst others: Generational Accounting,Around the world, The University of Chicago Press, 1999, p. 1-7, chap. 2 p. 31-41, chap. 4, p. 73-101, chap. 10, p. 219-239, and chap. 12 p. 277-299

Lars Haagen Petersen and Torben M. Andersen: Financial Restraint in a mature welfare state, the case of Denmark, Oxford Review of Economic Policy vol. 22, Issue 3, 2006 (30P)

Torben M. Andersen Welfare State, the Scandinavian model. Economics working paper 2011 – 1 (27P)

Torben M. Andersen- why do Scandinavians work? Cesito working paper no. 3068

DREAM rapport, 2011, English Edition, Multivers 2012 p. 8-167

World population prospects, U.N. New York, 2013.

General knowledge in macro economy and welfare policy. Welfare politics and the Social welfare state is International, and in Denmark it’s a divided field.
Economists can immediately be able to follow the course in an extension of Macroeconomics III (Macro C). The course requires analytical skills in light of future economic challenges (e.g., demographics, Globalization, individualization, and the large public debt reorganization)
4 hours of lectures per week for 14 weeks

Time and room:
For time and classroom please press the link under "Se skema"(See schedule) at the right side of this page (15E means Autumn 2015, 16F means Spring 2016).
Normally the exercise classes begin in the second week of the semester.

You can find the similar information partly in English at
https:/​/​skema.ku.dk/​ku1516/​uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F16;Economics of Welfare ”
-Select Period: “Forår/Spring – Weeks 4-29”
-Press: “ View Timetable”
  • Category
  • Hours
  • Exam
  • 28
  • Lectures
  • 56
  • Preparation
  • 191
  • Total
  • 275
Credit
10 ECTS
Type of assessment
Written assignment, 28 hours
The exam is 28-hours individual take-home assignment

The assignment should be a pdf-file with the file-name “your exam number followed by pdf”, e.g. if you have exam number 536, you shall call your paper 536.pdf The exam paper may not exceed seven (7) pages and maximum one page annex.
Aid
All aids allowed
Marking scale
7-point grading scale
Censorship form
External censorship
100 % censorship
Exam period

The exam takes place June 18, at 10.00 to June 19 at 14.00, 2016.

For enrolled students more information about examination, exam/re-sit, rules etc. is available at the student intranet for Examination (English) and student intranet for Examination (BA-Danish).

Re-exam

The re-exam takes place August 27, at 10.00 to August 28 at 14.00, 2016.

If only a few students have registered for the re-exam, the exam might change to an oral exam including the date for the exam, which will be informed  by the Examination Office in mid-August.

Criteria for exam assesment

The student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.