Working Paper No. 662

The Welfare State – Background, Achievements, Problems

Published: February 27, 2006Pages: 20Keywords: Justifications for Welfare State; Incentive Problems; Moral Hazard; Social NormsJEL-codes: H40; H53; H55; J22

The Welfare State – Background, Achievements, Problems Assar Lindbeck


This paper starts out with a brief discussion of the historical background, the justifications and the political forces behind the built up of the modern welfare state. It also summarizes its major achievements in terms of economic efficiency and redistribution. The paper also tries to identify some major problems of contemporary welfare-state arrangements, differentiating exogenous shocks from endogenous behaviour adjustments by individuals to the welfare state itself. The latter include tax distortions, moral hazard, and endogenous changes in social norms concerning work and benefit dependency.

Assar Lindbeck

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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