Private social welfare expenditures, 1972-85

This article updates the private social welfare expenditures series with complete data for 1985 and information for most categories through 1986. In the United States, private sector expenditures play a substantial role in the provision of social welfare services. This article presents private social welfare expenditures in terms of the four major categories--health, education, welfare and related services, and income maintenance that includes private pensions, sickness and disability benefits, and group insurance. The private expenditures, which totaled $429.3 billion in 1985, are distributed by major category beginning in 1972 and are also related to public social welfare expenditures and gross national product.     

Incremental and cyclical developments in public expenditure in West Germany

Abstract. The 'cyclical' effect covered in this paper deals with the development of public expenditure in West Germany in combination with the timing of elections. The underlying hypotheses on the cyclical development of certain expenditures are based on the 'New Political Economy' literature. This approach is then contrasted with the theory of budgetary incrementalism, an alternative mode of explanation of public sector growth. The data are tested to see whether a cyclical or linear model is more appropriate for describing public expenditure developments.     

Community Development Block Grant Spending Revisited: Patterns of Benefit and Program Institutionalization

This article analyzes Community Development Block Grant (CDBG)spending by local governments between 1988–1992. We addressfour issues examining actual expenditure patterns in a smallcentral city and five satellite cities in Michigan: changesin CDBG expenditure patterns; levels of social targeting; theextent of institutionalization of expenditure patterns; andthe level of privatization of CDBG spending. We conclude thatwhile spending for housing and public works is related to thefiscal health of cities, expenditures for economic developmentand social services are related to political characteristics.Further, local governments exceed federal social targeting guidelines.Finally, while there is little privatization, the communitiesstudied evidence modest levels of program innovation in thelater years of the CDBG program.     

THE IMPLICATIONS OF HIGH LEVELS OF PUBLIC SECTOR DEBT FOR ECONOMIC POLICY-MAKING: THE CASE OF SOUTH AUSTRALIA

Abstract: The relatively small and open South Australian economy has been facing the difficulties associated with the structural adjustment of its industry for over 15 years. In addition, the South Australian public sector has been contending with financial difficulties largely as a result of a reduction in grants from the commonwealth before the failure of the State Bank of South Australia. This paper reviews the growth and current level of government indebtedness in South Australia and discusses which group(s) is likely to bear the main burden of such debt. The main consequences of high levels of state public sector debt, including budgetary inflexibility, are also examined. The paper suggests that it will be necessary for relative wages and prices to adjust more freely if the negative impacts of an inevitable state government budgetary consolidation are to be minimised. If wages and prices are not free to adjust then unemployment will continue to take the brunt of the adjustment process. In addition, out-migration of businesses and people from South Australia will accelerate, leading to a further erosion of the taxation base. The State Bank indemnity arrangements and consequent levels of public sector debt incurred will require the state government to reduce the level and quality of services provided by the state public sector, sell state public sector assets and further improve efficiency and effectiveness. However, there are a number of important arguments why taxation should be an important means by which the South Australian government moves to retire public sector debt as soon as practicable. Not the least important of these arguments is the need to ensure accountability by elected representatives of government for their expenditure decisions.     

Employment,privatization, and managerial choice: Does contracting out reduce public sector employment?

We examine the effects of governments' use of alternative service provision on public employment using panel data from a nationally representative sample of local governments. We model the effects of alternative service provision on the size of the public workforce and hypothesize that alternative provision jointly impacts both full‐ and part‐time employment. We find evidence of an inter‐relationship between these employment types. Our results from seemingly unrelated and 3SLS regressions indicate that full‐time employment in the public sector declines when additional services are provided by for‐profit providers, while part‐time employment increases. The net employment effect in the public sector is negative when government services are moved to the for‐profit sector. These combined effects result in a compositional shift toward more part‐time public sector employment. © 2006 by the Association for Public Policy Analysis and Management     

Overspending in Public Organizations: Does Strategic Management Matter?

ABSTRACT

In the wake of the financial crash, many governments across the globe are seeking to curb expenditure in public sector organizations. To assess the extent to which public organizations can make strategic choices that might result in lower expenditure, we explore the relationship between strategic management and overspending in English local governments. The effects of strategic stances and actions on overspending are tested using multivariate statistical techniques. The empirical results show that an innovative strategic stance results in overspending as does a commitment to the development of new services, while a reactive strategic stance and decentralized decision making are associated with lower levels of overspending. Our analysis provides support for arguments that public organizations can make strategic choices that result in tighter control of their budgets.     

社会福利指数、政府支出规模及其结构优化

政府支出规模及其结构优化应以提高社会福利水平而不是以经济增长为其最终目标。构建了政府支出与消费、社会福利之间的理论分析模型,利用优化控制理论与方法,从理论上论证了在最大社会福利的基础上存在最优政府支出规模与支出结构安排,设计了衡量社会福利水平的新指标,并以此指标为基础,利用中国1982年—2005年的年度数据,对政府支出规模及其结构优化进行计量分析。其基本结论是:我国政府支出规模及其各种单项支出与社会福利指数之间存在较强的相关性,为满足我国不断增加的公共服务需求,应增加政府支出规模,优化政府支出的内部结构体系,即适度提高中央政府支出在政府总支出中所占的比重,减少投资性支出和行政管理支出,增加以教育、公共卫生、公共安全、社会保障为主体的公共服务性支出,以促进我国社会福利水平的提高。     

Performance Standards and Evaluation

The benefits of performance monitoring for public services are identified as greater transparency of objectives and accountability for results. This article considers recent experience in developing standards to evaluate efficiency and effectiveness of public services. In broad terms this is being done through performance information which is a much more encompassing concept than standards or indicators. Such information is an element of an accountability framework that provides greater management autonomy and flexibility and extends to the private sector which is increasingly providing, or involved with the provision of, public services.     

Tax and Expenditure Limitations and the Fiscal Response of Local Government: Asymmetric Intra-Local Fiscal Effects

This article empirically investigates the effects of introducing statewide measures to limit the ability of local jurisdictions to raise revenue or make expenditures. It does so in intervals of five years over a 25-year period, using fiscal observations for 31,804 units of local government in 787 metropolitan counties across the contiguous United States. Specifically explored is the effect of tax and expenditure limitations on the variation in revenues and expenditures between general purpose governments and school districts within county areas. Rather than imposing a uniform constraint across jurisdictions, tax and expenditure limitations (TELs) are associated with increased variation across both general purpose and school district revenues and expenditures and, by implication, increased service differentials. Effects are found to be asymmetric, with increased variation greatest within counties comprising the urban core and those with relatively more disadvantaged populations. The implications are that TELs are most constraining on the ability of governments serving economically less prosperous and at risk populations to meet public service needs. Such differential effects are of more than questionable merit and are the result of the application of blunt instruments to what is often an undemonstrated need. The outcome impairs both the efficiency and responsiveness of the local public sector.     

The impact of globalization on the composition of government expenditures: Evidence from panel data

According to the disciplining hypothesis, globalization restrains governments by inducing increased budgetary pressure. As a consequence, governments may attempt to curtail the welfare state, which is often seen as a drag on international competitiveness, by reducing especially their expenditures on transfers and subsidies. This globalization-induced welfare state retrenchment is potentially mitigated by citizens’ preferences to be compensated for the risks of globalization (“compensation hypothesis”). Employing two different datasets and various measures of globalization, we analyze whether globalization has indeed influenced the composition of government expenditures. For a sample of 60 countries, we examine the development of four broad expenditure categories for the period 1971–2001: capital expenditures, expenditures for goods and services, interest payments, and subsidies and other current transfers. A second dataset provides a much more detailed classification: public expenditures, expenditures for defence, order, economic affairs, environment, housing, health, recreation, education, and social expenditures. However, this second data set is only available since 1990—and only for OECD countries. Our results show that globalization did not influence the composition of government expenditures in a notable way.     

US state government privatization: Implications for social equity and inequality?

Privatization of state government services is commonplace, but our understanding of its effects is limited by data availability. We study the relationship between American state government contracting and public sector wages. Governments have used public sector employment to support a variety of goals, including social equity and economic development, but privatization, as a new public management (NPM) reform, may shift the focus. Our empirical analysis shows that state privatization of service delivery is associated with decreases in the public sector wage premium, but that these effects are not driven by gender, race, or low-levels of educational attainment. The fidelity of the implementation to NPM values conditions these effects. We also find that contracting service delivery is associated with a lower public sector wage premium for middle-class workers.     

The cost disease and government growth: Qualifications to Baumol

Changes in real world wage movements across sectors account for about a third of the rise in the cost of U.S. government services between 1959 and 1989, while relatively slower productivity in the public sector accounts for the remaining two-thirds. Even though it is slower, however, the productivity record still is positive even in the labor intensive government sector. Consequently Baumol argues that the public's likely future objection to necessary increases in the share of expenditures over the next 50 years will betray a fiscal illusion unless policymakers take pains to dissolve it. But slower productivity may be equally due to the structural organization. Removing public monopolies, reducing bureaucracies, and undertaking privatization in education for example, are other policy options that could radically change the productivity record. Meanwhile in his recent calculations of dramatic government expenditure increases expected in the next half century, Baumol omits reference to the marginal welfare cost of public funds, which on our estimates, will increase at least ten times to reach 1.71 by the year 2040.     

New perspectives on the public policy implications of defense and welfare expenditures in four modern democracies: 1950–1970

This article compares expenditure decisions in four “Western” democracies (Australia, Sweden, the United Kingdom, and the United States) in the policy areas of defense, health, education, and all government expenditures from 1950 to 1970. In addition, national income is used as a measure of economic growth in the four countries. The research focuses on the yearly fluctuations of expenditures and the statistical relationships existing among the variables under changing conditions. The research indicates significant departure from prior research findings and suggests that the assumption of an explicit trade-off between defense and welfare expenditures be reconsidered. In addition, when varying economic growth was examined, the research again indicates the need for reconsideration of prior relationships. Throughout, the article encourages the development of comparative policy research and theory and recommends the development of careful theoretical and methodological constructs.     

Outsourcing in China: an exploratory assessment

The increasing demands for public services, growing resource externalisation and decentralisation have driven Chinese governments to seek alternative means of service delivery. This article addresses the largely ignored outsourcing practice in China. Lack of awareness of and research on the widespread outsourcing was a result of the conceptual barriers created by China's economic transition and its choice of incremental reform path. By decomposing national fiscal expenditures, the article finds that from 2002 to 2004, outsourcing accounted for about one‐third of the total governmental services expenditures and demonstrated a trend of continuous growth. Such developments effectively transformed the basic landscape of public service delivery and created significant external dependence. Within just three decades, China has quickly shifted from an omnipotent state to an ‘incomplete’ state. The capacity of the administrative hierarchy has become severely constrained. Nonetheless, the political risks of the macro‐level transformation are largely mitigated at the micro‐level by mechanisms of public–private cooperation. These developments are embedded in informal arrangements that, remarkably, maintain the survival of the current power structure. Copyright © 2008 John Wiley & Sons, Ltd.     

Political-economic aspects of public employment

Abstract. An examination of public employment and expenditure data for 17 OECD countries for the period 1963–1983 reveals decelerating growth in public employment after 1970, whereas expenditure growth rates have been accelerating. Two contrary tendencies in public sector employment since the early 1970s are apparent: a general decline in goods and market services, and a significant increase in communal and social services. Comparative empirical analysis, using a pooled cross section-time series technique, confirms the important contribution of increasing wealth to public employment growth. Similarly, a strong societal position for organised labour and increasing unemployment rates contribute to public employment growth, thereby suggesting the presence of a discretionary stabilization policy. Contrary to expectations, however, increased trade dependence exerts a negative impact. With regard to the relationship between expenditure and employment, a general increase in the employment creation efficiency of spending can be discerned. Empirical estimates again suggest that the importance of labour in political-economic decision-making has intensified the employment creation effect of public spending.     

Overlapping jurisdictions: Substitutes or complements?

This paper presents a simple model of the demand relationship between the activities undertaken by overlapping governments and uses the framework to estimate the relationship between municipal and county expenditures. The empirical results reveal a complementary relationship between county and city general expenditures; any public sector expansion effects of monopoly power at the county level will therefore be reinforced by greater municipal spending, further expanding the total size of the local public sector. On the other hand, changes in county police and roads expenditures appear to have no strong stable impact on municipal police and roads expenditures, respectively, providing no reinforcing or offsetting municipal spending responses to decisions at the county level.     

Partnering to beckon them home: public‐sector innovation for diaspora foreign investment promotion

This article examines a little‐studied component of public administration existing in most countries around the world and particularly important for developing countries: national investment promotion agencies (IPAs). Diasporas are an increasingly important and relatively untapped resource for development and many homeland governments view diaspora foreign investment as key to their economic development. In addition to being generally under‐resourced, many IPAs struggle to identify ways to effectively target, cultivate and facilitate diaspora homeland investment (DHI). To accomplish these goals, these public‐sector entities are beginning to identify and leverage key partnerships in the NGO sector. We describe the services IPAs offer and enumerate the challenges they face associated with DHI. Drawing on three illustrations of IPA–NGO partnerships, we develop preliminary tools for identifying and designing partnerships for the purpose of promoting DHI based on their scope, function and degree of formality. Copyright © 2007 John Wiley & Sons, Ltd.     

The Fiscal Impacts of Urban Sprawl: Evidence From U.S. County Areas

This paper examines the fiscal impacts of urban development patterns in the United States. Previous studies have indicated that it is costly to provide public services in areas with low‐density, spatially expansive development, leading to higher per capita expenditures. However, theory would suggest alternate outcomes. This paper examines this question using a panel dataset of U.S. urban county areas and a specification allowing for potential nonlinearity between development patterns and per capita expenditures. Estimates indicate that the spatial extent of development is the most important factor in expenditures; it is less costly to provide public services when development is more compact. Higher density increases per capita expenditures; however, the effects are small.     

Controlling Nonconventional Expenditure: Tax Expenditures and Loans

Tax expenditures, credits and guarantees, and other nonconventional expenditures are prominent features of the public finances of the United States and other industrialized democracies. While reliable data on these practices have generally been available only for a decade or less, there is reason to believe that these types of transactions now constitute a larger share of total public expenditure than they did in the past. This article discusses the concepts arid implications of two types of nonconventional expenditures—tax expendituures and loans—as well as recent efforts to bring them within the scope of the budget process. The article deals mostly with American practices, but it also draws on the experiences of other democratic countries.     

Competition, Marketisation, Public Services and Public Ethics

The topic I address provides an embarrassment of scope. At the same time, it allows the development of a theme that is worthwhile discussing. When in the public sector is it worthwhile to import private sector concepts, principles and practices and when would the adoption of a private sector model be injurious to the state's constituents? The theme is worthwhile discussing, in part because some of Australia's jurisdictions appear to be adopting what they consider to be private sector practices, without an adequate framework to guide them. Because there is no proper framework, mistakes are made which could have been avoided. There is also some evidence that the public is uneasy about the loss of ‘public’ from the term public services. It would not be in the public’s own interests to resist, for no good reason, the adoption of private sector principles where that would allow more cost-effective services. The topic also allows a discussion on the influence on public sector ethics of the trend to place senior public servants on contracts that can be disposed of without a reason or prospect of appeal.