The Welfare State

The market economy is efficient, but not fair. Since wages are dictated by the law of scarcity, some people cannot earn enough to adequately live off their income. That is why a counterbalancing welfare state is needed to make net incomes fairer than if they were to be dictated by the market alone.

State redistribution can be interpreted as a form of insurance that protects citizens and their children from life’s trials and tribulations in a way that private insurance policies cannot. That is the basic justification for the welfare state.

However, state protection can lead to changes in behaviour, and can specifically weaken the efforts made by its citizens to secure an income. This reduces the size of the cake to be distributed. The art of economic policy is to strike best possible compromise between the size of the cake and the equality of its distribution.

TV Lectures

Can Germany Still be Saved? - Theses on the Future of the Republic, Information page


"Soziale Sicherung auf dem Prüfstand – Stimmt die Balance zwischen Fördern und Fordern?", Presentation (German), ifo Institute, 9 October 2008, German; (Download, 450 KB).

Refereed scientific monographs

Can Germany be Saved? The Malaise of the World’s First Welfare State, MIT Press: Cambridge, Mass., 2007, 356 pages. (Revised and updated translation of Ist Deutschland noch zu retten?); Chapter 4: “Competing against the Welfare State”. To Amazon.




Non-refereed scientific monographs

Redesigning the Welfare State: Germany’s Current Agenda for an Activating Social Assistance (together with Martin Werding et al.), Edward Elgar: Cheltenham, UK; Northhampton, USA, 2006, 204 pages. Order via Edward Elgar.




Smaller, non-refereed scientific monographs

The Welfare State and the Forces of Globalization, Zelle Jijlstra Lecture 5, Wassenaar 2006, pp. 20; CESifo Working Paper No. 1925, 2007; (Download, 140 KB); NBER Working Paper No. w12946, March 2007.

Welfare to Work in Germany. A Proposal on How to Promote Employment and Growth, (together with Martin Werding et al.), CESifo Research Reports, No. 1, Munich 2003, 90 pages; (Download, 565 KB).

Articles in refereed journals

"EU Enlargement and the Future of the Welfare State", Stevenson Citizenship Lectures, Scottish Journal of Political Economy 49, 2002, pp. 104-115; (Download, 130 KB)CESifo Working Paper No. 307, June 2000; Working Paper No. 2001_5, Department of Economics, University of Glasgow.

"The Threat to the German Welfare State"Atlantic Economic Journal 28, 2000, pp. 279-294;(Download, 932 KB) CESifo Working Paper No. 320, July 2000.

"European Integration and the Future of the Welfare State"Swedish Economic Policy Review 5, 1998, pp. 113-132; (Download, 6.57 MB)CESifo Working Paper No. 153, 1998.

"A Theory of the Welfare State“, Scandinavian Journal of Economics 97, 1995, pp. 495-526; (Download, 893 KB); CESifo Working Paper Nr. 65, 1994; NBER Working Paper No. 4856, April 1996.

Academic papers in conference volumes

"The Welfare State and the Forces of Globalization", in: Edmund S. Phelps and Hans-Werner Sinn, eds.,Perspectives on the Performance of the Continental Economies, MIT Press: Cambridge, Mass., 2011, pp. 413-428; (Download, 5,3 MB).

Policy Contributions in Journals and Academic Volumes

"Can Germany be saved? The malaise of the world’s first welfare state", VOX,, June 19th, 2007.

Short Policy Contributions and Newspaper Articles

"The Next Welfare State“, (ref. Project Syndicate February 2006), Die Welt (Germany), Die Presse (Austria), L'Echo (Belgium), Kapital (Bulgaria), Financial Mirror (Cyprus), Ekonom (Czech Republic), Aripaev (Estonia), Taloussanomat (Finland), Vilaggazdasag (Hungary), Diena (Latvia), Diario Economico (Portugal), Dilema Veche (Romania), Danas (Serbia), Sme (Slovakia), L´Agefi (Switzerland), Diario Las Americas (USA), Jordan Times (Jordan), Al Raya (Qatar), Al Eqtisadiah (Saudi Arabia), South China Morning Post (Hongkong), The Japan Times (Japan), The Korea Herald (South Korea), Daily Times (Pakistan), The Straits Times and Lianhe Zaobao (Singapore), Taipei Times (Taiwan), Les Echos (Mali), Business World (Philippines), AKI-Press (Kyrgyzstan), Optovik (Uzbekistan), El Siglo XXI (Guatemala), Ultima Hora (Paraguay).

Newspaper Interviews and Discussions (since 2002)

"Werner Sinn: 'The welfare state is not a gift'",, November 15th, 2010.

"Should EU Immigrants Have Full Access to the Welfare State?“, CESifo Online Live Discussion with Tito Boeri, July 2nd, 2003.

Ifo Viewpoints

Ifo Viewpoint No. 72: The Next Welfare State, 02.03.2006.

Ifo Viewpoint No. 37: The Heart of Hartz, 19.08.2002.