The Birth and Growth of the Social Insurance State: Explaining Old Age and Medical Insurance Across Countries

We examine the factors leading to creation and growth ofnational Old-Age Insurance (OAI) and Health Insurance schemes.None of the theories we test fit the data very well. There isweak evidence that the probability of adopting a systemdeclines in a country's wealth and in the ethnic heterogeneityof its population. Catholic countries are more likely tocreate earnings-related OAI systems. The growth of OAIspending since 1960 has varied considerably across countries,with fast growth in countries emerging from dictatorship andnon-English speaking countries. We conclude that socialinsurance can be politically expedient for many differentreasons.