The Welfare Effects of Public Expenditure Programs Reconsidered

30 Pages Posted: 15 Feb 2006

See all articles by Robert Holzmann

Robert Holzmann

University of Malaya; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); World Bank

Date Written: August 2, 1989


The paper proposes a new welfare-based measure to evaluate the distributive effects of public programs. The proposed measure differs from traditional approaches in two important ways: first, it is based on life-cycle considerations, since most public expenditure programs have an intertemporal objective (such as education, housing, or social security); second, it takes into account market imperfections (such as in capital, credit, or annuity markets), which themselves give rise to many governmental interventions. The measure and its numerical illustrations suggest that, in general, the welfare effects from public programs whose aim is to eliminate market constraints predominate those that can be achieved through interpersonal income distribution.

JEL Classification: 0243, 2312

Suggested Citation

Holzmann, Robert, The Welfare Effects of Public Expenditure Programs Reconsidered (August 2, 1989). IMF Working Paper No. 89/62, Available at SSRN:

Robert Holzmann (Contact Author)

University of Malaya ( email )

University of Malaya
Kuala Lumpur, Wilayah Persekutuan 50603

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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