Wagner's Law

The Wagner Law, developed by Adolph Wagner, is an economic theory related to increases in
public expenditures. In the development and progress of a country, as well as advancements in
welfare and infrastructure, various social developments occur, necessitating public
expenditures in areas such as education, transportation, food, healthcare, and security.
Consequently, as there is an increase in an individual's national income, there will be an
increase in social development and demands, which also raises the government's interest and
supply towards these demands, necessitating necessary expenditures in these areas. In fact, it
has been argued that there is a significant relationship between public growth and the growth
of an industrialized economy. Thus, the need and supply for services presented as a natural
consequence of the government's development, growth, and industrialization are also relevant.
When these needs are met, economic growth will be observed. Therefore, this law is also
known as the law of increasing government expenditures and a mutually positive relationship
is observed. In short, Wagner's Law concerns the relationship between economic growth and
public expenditures.