Welfare States and Social Trust: ‘Crowding-Out’ Dilemma

Crowding-out hypothesis holds that welfare state development tends to erode social trust. In analyzing this relationship, the welfare state is usually operationalized through total social spending assuming automatically identical effects of different social policies on social trust and ignoring the notion of targeting. The main objective of this study is to check if specification of the internal structure of social spending will help to find evidence supporting the crowding-out hypothesis. The specification is done around functional and institutional axes which take account of the type of risk the social policy covers and the design of benefit schemes it offers. The result obtained provided no support for crowding-out hypothesis in the case of sub-samples for pensioners and unemployed, but they were detected when using single indicator for social spending on means-tested schemes.  This is a preview of subscription content, log in via an institution  to check access.