II Rodolfo Debenedetti Lecture – Alberto Alesina

The Welfare State in US and Europe: Why so Different?

II Rodolfo Debenedetti Lecture, Milan

20 November 2002


Alberto Alesina (Harvard University)

The welfare state is much larger in Europe than in the US, and, more generally, Europeans seem to be more concerned about equalizing incomes and reducing inequality than Americans are. Why is this? The purpose of this Lecture is to examine various explanations for these phenomena. First, the main differences in redistributive policies on the two sides of the Atlantic are briefly illustrated. This exercise shows also how significant differences within Europe exist. Next, the lecture will offer various explanations for the wide differencese. Schematically such explanations can be explained as follows:

  1. purely economic reasons. These include different levels of pretax income inequality, openness, social mobility, etc.;
  2. politico-historical reasons. These include electoral systems, the role of courts, historical reasons why a socialist party never fully established itself in the US;
  3. sociological reasons. These include different attitudes toward the poor, individual versus social responsibilities in correcting ex post income differences, race relations.

The lecture will then try to disentangle which of these various explanations have more weight for explaining cross country differences.