Reducing inequality of incomes and combating poverty are commonly regarded as the central objectives of welfare states (Saunders, 2021). Most analysis of impacts of the welfare state focus on effects on the distribution of income, but it can also be expected that welfare states structure the level and distribution of wealth, but these effects are not straightforward – and may take a long time to work through.
It has long been argued that social security reduces the level of savings for retirement and thus the level of private wealth (Feldstein, 1974, 1980), but more recently critics of the welfare state such as the US Cato Institute (Edwards, 2019) argue that larger welfare states actually increase the inequality of wealth. This approach cites research by the European Central Bank (Fessler and Schürz, 2019) which shows that the measured inequality of wealth is higher in European countries with relatively more developed welfare states.
This paper analyses the relationship between the size and structure of welfare state spending and the size and distribution of private and public pension wealth. In the context of increasing concerns about increasing inequality of wealth, particularly in access to housing, the paper also analyses the vulnerability of different welfare state designs to differing risks, including the reliability of public pension wealth due to population ageing and the insecurity of private pension wealth due to market volatility.
Speaker bio:
Peter Whiteford (FASSA) is a Professor in the Crawford School of Public Policy at The Australian National University, Canberra. He is the Director of the Social Policy Institute and a Fellow of the Tax and Transfer Policy Institute in the Crawford School. His research focus is on international comparisons of social security policies, and on inequality and redistribution. He has previously worked for the Australian government, at the Social Policy Research Centre at the University of New South Wales in Sydney and in the Social Policy Research Unit at the University of York in the United Kingdom, as well as in the Directorate of Employment, Labour and Social Affairs of the Organisation for Economic Co-operation and Development in Paris. In 2008, he was appointed by the Australian government to the Reference Group for the Harmer Review of the Australian pension system. In 2018 he was elected as a Fellow of the Academy of Social Sciences in Australia. In 2022 he was appointed to the Australian Government Economic Inclusion Advisory Committee.
