The Threat to the German Welfare State
Germany is in a dilemma. Low wage competition via product and factor markets increases the demands on the welfare state, but increased systems competition in the context of international factor mobility reduces the possibilities of maintaining it. The welfare state has important allocative functions. It is an insurance against career risks and it stimulates risk taking and economic growth. However, it also has severe moral hazard effects by reducing work incentives. To help the welfare state survive and improve its performance, the paper advocates the home country principle for the treatment of immigrants, the introduction of funded elements in the pension system, and employment subsidies at the expense of ordinary welfare payments.
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- Sinn, Hans-Werner, 1990.
"Tax harmonization and tax competition in Europe,"
European Economic Review,
Elsevier, vol. 34(2-3), pages 489-504, May.
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- Sinn, Hans-Werner, 1996. "Social Insurance, Incentives and Risk Taking," Munich Reprints in Economics 19834, University of Munich, Department of Economics.
- Sinn, Hans-Werner, 1998. "The Pay-As You-Go Pension System as a Fertility Insurance and Enforcement Device," CEPR Discussion Papers 2023, C.E.P.R. Discussion Papers.
- Hans-Werner Sinn, 1998. "The Pay-As-You-Go Pension System as a Fertility Insurance and Enforcement Device," NBER Working Papers 6610, National Bureau of Economic Research, Inc.
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- Burgess, Simon M, 1988. "Employment Adjustment in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 98(389), pages 81-103, March. Full references (including those not matched with items on IDEAS)