The Welfare State in Post‐Communist Countries

Nicholas Barr

in The Welfare State as Piggy Bank

Published in print May 2001 | ISBN: 9780199246595
Published online November 2003 | e-ISBN: 9780191595936 | DOI:
 The Welfare State in Post‐Communist Countries

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Post‐communist transition has two central elements: a move from central planning to market forces and a move from totalitarian to more democratic government. Because of the resulting economic, political, and social disruption, the reforming countries fail even more sharply than western countries to conform to the assumptions of the simple model described in Ch. 2. Information is highly imperfect, risk greater, and uncertainty pervasive. Two conclusions about the welfare state follow. Firstly, the role of the state is perhaps greater than in the advanced industrial countries. Secondly, – the subject of this chapter – the welfare state needs systematically to change to meet the needs of a market economy. The first part of the chapter establishes the simple analytics of transition. Subsequent sections parallel the rest of the book, discussing insurance issues, particularly in connection with labour‐market adjustment, the reform of pensions, and necessary changes in the education system.

Keywords: central planning; education; imperfect information; insurance; market forces; pensions; post‐communist transition; risk; role of the state; uncertainty

Chapter.  8649 words.  Illustrated.

Subjects: Public Economics

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