Public debate about the welfare state in OECD countries has emphasized the need for reform to meet a two-fold set of shocks: budgetary pressure and a labor market shift against unskilled workers. The aim of the paper is to set out a framework for examining the implications of these shocks for...

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...