Does public spending “crowd out” nonprofit welfare?

Abstract

Social origins theory proposes that countries cluster around different models according to how public welfare spending affects nonprofit sector scale (Anheier & Salamon, 2006; Salamon & Anheier, 1998). This article confronts these assumptions about a liberal, corporatist, and social democratic model with results from a comparative analysis of highly industrialized countries with extensive welfare arrangements. We focus on nonprofit sector employment in relation to total employment in the welfare field, including education and research, health, and social services. Explanatory factors are public welfare spending, share of income from donations, and religious homogeneity. Qualitative Comparative Analysis (QCA) (Ragin, 2000) is applied to sort countries in types. The results show that the consequences of public sector welfare spending on nonprofit welfare employment vary depending on other social conditions. In liberal countries, low public sector welfare spending results in a small nonprofit share of employment. The preconditions are low religious homogeneity and large shares of nonprofit income from donations. In other Western European countries, the size of public sector welfare spending is inversely proportional with the size of the nonprofit share of employment, depending on religious homogeneity. The Nordic countries have the highest religious homogeneity, and largest public welfare costs, and accordingly, the smallest share of nonprofit welfare services. However, a similar “crowding out” pattern can be found in the presumably corporatist countries such as France, Austria, and also to some extent in Germany and Italy. In the other end of the line, we find the Netherlands, which is the clearest example of the presumed corporatist pattern in this sample. Religious homogeneity comes into play in both the liberal and the Western European causal constellation in accordance with Weisbrod's theory of government failure/market failure (Weisbrod, 1977), which indicates that this factor is more important for nonprofit welfare regimes than previously thought.

Citation

Henrik Sivesind, K. and Selle, P. (2009), "Does public spending “crowd out” nonprofit welfare?", Enjolras, B. and Henrik Sivesind, K. (Ed.) Civil Society in Comparative Perspective (Comparative Social Research, Vol. 26), Emerald Group Publishing Limited, Leeds, pp. 105-134. https://doi.org/10.1108/S0195-6310(2009)0000026009