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.
|Date of creation:||2000|
|Date of revision:|
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- 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.
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- Nickell, Stephen J & Symons, James, 1990. "The Real Wage-Employment Relationship in the United States," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 1-15, January.
- Sinn, Hans-Werner, 1990.
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Munich Reprints in Economics
19846, University of Munich, Department of Economics.
- Hans-Werner Sinn, 1995.
"Social Insurance, Incentives, and Risk Taking,"
NBER Working Papers
5335, National Bureau of Economic Research, Inc.
- Burgess, Simon M, 1988. "Employment Adjustment in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 98(389), pages 81-103, March.
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