How will international integration affect welfare policies? This paper considers the possibilities of financing public sector activities (public consumption and social security expenses) by general (wage) taxation in an economy which becomes more integrated in international product markets. Even...

In recent years the welfare state has come under attack from economists, and in many OECD countries there have been calls for spending on the welfare state to be rolled back. Critics argue that the size of transfer programs is responsible for a decline in economic performance and that cuts in...