The Size and Composition of Government Spending in Europe and Its Impact on Well-Being

Hessami, Zohal (2010): The Size and Composition of Government Spending in Europe and Its Impact on Well-Being.

Abstract

This paper analyses whether large governments in Europe reflect efficient responses to a changing social and economic environment (‘welfare economic view’) as opposed to wasteful spending (‘public choice view’). To this end, the effect of government size on subjective well-being is estimated in a micro dataset covering twelve EU countries from 1990 to 2000. The estimations provide evidence for (i) an inversely U-shaped relationship between public sector size and well-being. (ii) The effect of government size on well-being depends on levels of corruption and decentralization as well as people’s ideological preferences and their position in the income distribution. Finally, (iii) higher levels of well-being could have been achieved by spending more on education and less on social protection.

• Item Type: MPRA Paper
• Language: English
• Keywords: Life satisfaction, well-being, public spending, government size
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; H - Public Economics > H4 - Publicly Provided Goods > H40 - General; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being

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