Working Papers

V. Meliciani, G. Terzo – Public welfare spending and cross-country economic disparities in the European Union: Panel evidence for the period 2000-2021

The aim of this paper is to investigate the role of public welfare spending in supporting economic well-being in the European Union (EU-27). To this end, we construct an aggregate of public spending that considers three key areas: health, education, and social protection. We assume that public spending in these areas can be instrumental in promoting citizen empowerment, which ultimately translates into improved economic well-being of countries. To empirically test this assumption, we design a panel analysis of the EU-27 countries for the period 2000-2021, using a variety of methods that are useful for obtaining evidence that is robust to multiple issues and scenarios. The results of the empirical analysis confirm the existence of a positive relationship between welfare spending and the socio-economic well-being of EU countries. This evidence reinforces the assumption that allocating more resources to health, education, and social protection could be a crucial choice for public policies aiming to steer economic development towards more equitable and sustainable paths.

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