Why Doesn't the United States Have a European-Style Welfare State?

This article examines alternative explanations of the greater generosity of social welfare systems in Europe than in the U.S. European governments redistribute income among their citizens on a much larger scale than does the U.S. government. European social programs are more generous and reach a larger share of citizens. European tax systems are more progressive. European regulations designed to protect the poor are more intrusive. Economic, political, and behavioral explanations for the differences between the U.S. and Europe are considered. Economic explanations focus on the variance of income and the skewness of the income distribution before taxes and transfers, the social costs of taxation, the volatility of income, and expected changes in income for the median voter. The paper concludes that most of these theories cannot explain the observed differences. Political explanations for the observed level of redistribution focus on institutions that prevent minorities from gaining political power or that strictly protect individuals' private property. Finally, reciprocal altruism is discussed as a possible behavioral explanation for redistribution. Reciprocal altruism implies that voters will dislike giving money to the poor if, as in the U.S., the poor are perceived as lazy.