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CREPP, Université de Liège, CORE, and Delta. The author gratefully acknowledges support from the SSTC (Belgium) and the IMF Fiscal Affairs Department. This paper is partially based on Casamatta et al. (1998, 1999) and Cremer and Pestieau (1999).
The terms Bismarckian and Beveridgean are used in reference to the relation between contributions and benefits. A Bismarckian scheme is one when the link between the two is tight; a Beveridgean scheme is one with float benefits and contributions proportional to earnings. Scholars of both William Henry Beveridge (1879–1963) and Otto von Bismarck (1815–1898) often find this view oversimplistic.
In most European countries, the political weight of social insurees is much stronger than that of welfare recipients. In the United States, the social security lobby has much more voice than those benefiting from welfare payments do.
Mulligan and Sala-i-Martin (1999).
See, on this, Thaler (1992), who argues that changes that make things worse loom much larger than improvements.