How expensive is the welfare state?

• Willem Adema and Maxime Ladaique
• OECD Directorate for Employment, Labour and Social Affairs

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01 December 2009This paper presents information on trends and composition of social expenditure across the OECD, and accounts for the effects of the tax system and private social expenditure.

Gross public social expenditure on average across OECD increased from 16% of GDP in 1980 to 21% in 2005, of which public pensions (7% of GDP) and public health expenditure (6% of GDP) are the largest items. After accounting for the impact of taxation and private benefits, social expenditure (1) amounts to over 30% of GDP at factor cost in Belgium, Germany, and France and (2) ranges within a few percentage points of each other in Austria, Canada, Denmark, Finland, Italy, the Netherlands, Portugal and the United States. Australia is included in the analysis.