An Empirical Study on the Relationship between Economic Growth and Public Welfare

Abstract

This paper investigates the relationship between economic growth and public welfare, where the criticality of this study is to assist governments in issuing policies regarding economic growth to maximise the prosperity and welfare in particular countries. This study adopts a pooled ordinary least squares (OLS) analysis, a regression with year fixed effects as well as a regression with both year fixed effects and country fixed effects, proposing that economic growth has an effect on social well-being. The aspects of welfare researched on are comprised of income inequality, crime severity, national educational level, national healthcare level and carbon emission level, and standardisation method is applied to unify the five welfare variables. In the pooled OLS, a positive coefficient is found with a p-value less than 0.001, while the coefficients perceive an opposite sign with p-values both higher than 0.1 in the latter two regressions. Thus, the growth effect on welfare is significant for the first regression and not significant for the latter two regressions, manifesting that country-specific and year-specific characteristics strongly influence the results. In consideration of the results and analyses of this research, in an attempt to facilitate public well-being, governments should consider the factors specific to countries and years when deciding on economic policies rather than unconditionally prioritise the pursuit of growth in economies.