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Federal Reserve Bank of Kansas City
Research Working Paper
The birth and growth of the social-insurance state : explaining old-age and medical insurance across countries
David M. Cutler
Richard Johnson
Abstract

We seek to explain why countries have adopted national Old-Age Insurance and Health Insurance programs. Theoretical work has posited several factors that could lead to this adoption: the strain from expanding capitalism; the need for political legitimacy; the desire to transfer to similar people; increased wealth; and the outcome of leviathan government. We relate the probability of a country’s creating social insurance to proxies for each of these theories. We find weak evidence that the probability of adopting a system declines with increases in wealth and with greater ethnic heterogeneity. Still, none of the theories is very strongly related to system adoption. We conclude that social insurance can be politically expedient for many different reasons.


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David M. Cutler & Richard Johnson, The birth and growth of the social-insurance state : explaining old-age and medical insurance across countries, Federal Reserve Bank of Kansas City, Research Working Paper RWP 01-13, 2001.
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Keywords: Economic history ; Insurance ; Insurance; Health ; Old age
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