Social investment effects of public education, health care, and welfare service expenditures on economic growth

Abstract

| INTRODUC TI ONThe purpose of this study is twofold: to review theoretical literature on the social investment mechanism of social services and to offer empirical evidences about social investment effects especially in key social services areas including health care, education, and welfare services with a focus on its impact on economic growth.The "productivity of welfare" has been a long-standing issue in the academic arena of the welfare state theories. With almost no exception, especially when it comes to recent one or two decades, welfare states seek to ensure their sustainability through restructuring of themselves, not through downsizing themselves. When sustainability issue became a crucial condition behind restructuring welfare state, productivity of welfare states also became a hotly debated topic in the field of the welfare state research. Although unveiling mechanism behind the economic performance of welfare states bears great significance, existing literature has not dealt with this mechanism in full detail. In this context, the first task of this study is to converge the findings of three branches of research dealing with "the productive function of welfare."The first branch is represented by attempts to disclose the effect of welfare states on economic growth. This strand of research was mostly focused on bringing into light the relationship between public spending of welfare states and economic growth (Ventelou & Bry, 2006; AbstractThe purpose of this study is to theoretically and empirically examine whether public spending in education, health care, and welfare service operates as a fruitful investment in welfare states, which has been implied in the literature of social investment arguments. Based on comprehensive review of existing literature, this study suggested a tripartite mechanism of social investment effect of such spending, that is "enhancement of human capital," "support for labor force participation," and "job creation." To find the empirical evidence, a pooled time-series cross-section analysis was conducted with the data of 15 advanced welfare states from 1980 to 2015 using estimation technique of fixed-effect model. The results confirmed that public spending in education, health care, and welfare service had a positive medium-term as well as long-term effect on economic performance, while cash-type welfare spending had an obscure or no visible effect on economy. Government consumption that is a proxy and control variable of size of the welfare state showed a positive effect on real GDP in the medium term but a negative effect in the long run. In conclusion, this study suggests that reinforcing social services should be recognized and dealt with as essence of social investment strategy. K E Y W O R D Seconomic growth, education, health care, public expenditure, social investment, social service, welfare service

The impact of top management education on the socially responsible management of local government in the context of investment development

“…The authors analyze the impact of these investments on enhancing human capital formation, promoting labour market participation, and creating new jobs. The results confirmed that public spending on education, health care, and social services had positive medium-and long-term effects on economic performance (Kim & Ahn, 2020). Regarding our problem, we examine the ex-post impact of education spending stemming from educational attainment.…”

The efficiency of government finanical expenditures before and during the COVID-19 pandemic: A cross-country investigation

“…Using instrumental variable estimations or the two-system GMM estimator, Table 1 shows how different types of government spending affect TFPI. The results show that spending money on health impacts significantly TFP, because there is a high risk of pandemics in these countries, their economies are not very strong, and they have large populations and low standards of living ( Bhorat et al., 2021 ; Kim and Ahn, 2020 ). Deaton (2013) says that health, which is a reflection of human ability, is the basis for human progress and development.…”

Social expenditure multiplier: Assessment of economic effect and optimal values

“…According to another approach, government social expenditures are understood in the context of intentions to bring the country closer to a certain ethical ideal, in which social justice will be ensured, and the idea of a "welfare state for liberty" is embodied (Béland et al, 2021, p. 23). In the mentioned work (Béland et al, 2021), the modern discourse of such views is considered quite thoroughly, as well as in other works containing a theoretical justification of the foundations of the welfare state, directions of its regulatory influence (Nelson et al, 2020;Wilson & Wilson, 2021), as well as empirical evidence of the effectiveness of relevant government programs (Kim & Ahn, 2020;Lessa Kerstenetzky & Pereira Guedes, 2021).…”