Poverty, Insecurity, and Social Welfare Policy

This chapter examines the research of cliometricians on poverty, income insecurity, and the economics of social welfare policy. It focuses on Great Britain and the United States, although research on Continental Europe also is included. Attempts to measure the extent of poverty, and polemics on how to deal with the poor, existed long before the eighteenth century, but the “modern” debate regarding the causes of poverty and the government’s role in dealing with it is a byproduct of the industrial revolution. The nineteenth and twentieth centuries produced vast amounts of quantitative and qualitative data on working-class living standards. Cliometricians have mined that data to increase our knowledge of the extent of poverty and the changing role played by social welfare policies. Their research has shown that long-term trends in social spending over the past two centuries were driven by changes in the composition of the electorate (political voice), the aging of the population, increases in workers’ insecurity resulting from globalization, and income growth. They also have shed light on the relationship between public and private social spending, and on the effect of social welfare policies on the health, work-effort, and savings behavior of the poor. Finally, in contrast to the oft-held assertion that government social spending has negative consequences for the macro economy, cliometricians have shown that postwar welfare states have had generally positive effects on economic growth.