European Business Schools Librarian's Group

Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics

Does the Welfare State Destroy the Family? Evidence from OECD Member Countries

Martin Halla (), Mario Lackner and Johann Scharler
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Martin Halla: Department of Economics, Vienna University of Economics and Business
Mario Lackner: Department of Economics, University of Linz
Johann Scharler: Department of Economics, University of Innsbruck

Abstract: We study the effect of the size of the welfare state on family outcomes in OECD member countries. Exploiting exogenous variation in public social spending, due to varying degrees of political fractionalization (i.e. the number of relevant parties involved in the legislative process), we show that an expansion in the welfare state increases the fertility, marriage, and divorce rates with a quantitatively stronger effect on the marriage rate. We conclude that the welfare state supports family formation. Nevertheless, we also find that the welfare state decouples marriage and fertility, and therefore, alters the organization of the family.

Keywords: Marriage, divorce, fertility, welfare state, risk sharing

JEL-codes: J12; J13; J18; D1; D62; H31; H53 February 2013

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