Abstract
This article starts out with a brief discussion of the historical background, the justifications and the political forces behind the creation of the modern welfare state. It also summarizes its major achievements in terms of economic efficiency and redistribution. The article also tries to identify some major problems of contemporary welfare-state arrangements, distinguishing problems caused by exogenous shocks from those related to 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.
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Lindbeck, A. (2018). Welfare State. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1588
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1588
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