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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Interdisciplinary European Studies

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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