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Working Paper No. 662

The Welfare State – Background, Achievements, Problems

Working Paper
Reference
Lindbeck, Assar (2006). “The Welfare State – Background, Achievements, Problems”. IFN Working Paper No. 662. Stockholm: Research Institute of Industrial Economics (IFN).

Author
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.