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The threat to the German welfare state

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  • Sinn, Hans-Werner

Abstract

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, this 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.

Suggested Citation

  • Sinn, Hans-Werner, 2000. "The threat to the German welfare state," Munich Reprints in Economics 19861, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:19861
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    Cited by:

    1. Adam, Antonis & Moutos, Thomas, 2011. "A politico-economic analysis of minimum wages and wage subsidies," Economics Letters, Elsevier, vol. 110(3), pages 171-173, March.
    2. Giancarlo Corsetti & John Flemming & Seppo Honkapohja & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2002. "Welfare to Work," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 71-86, 04.
      • Giancarlo Corsetti & John Flemming & Seppo Honkapohja & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2002. "Welfare to Work," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2002(CESIFOFOR), pages 71-86, 04.
    3. Laura Chadwick & Jürgen Volkert, 2003. "Making Work Pay: U.S. American models for a German context?," IAW Discussion Papers 08, Institut für Angewandte Wirtschaftsforschung (IAW).
    4. Lindbeck, Assar, 2003. "Improving the Performance of the European Social Model - The Welfare State over the Life Cycle," Working Paper Series 587, Research Institute of Industrial Economics.
    5. Wagner, Ulrich & Volkert, Jürgen, 2002. "Beschäftigungshemmende Reformstaus in der Bundesrepublik Deutschland und wie man sie auflösen könnte / Flexibilisierung durch Kombi-Einkommen? Die Perspektive der Neuen Politischen Ökonomie," Beiträge der Hochschule Pforzheim 102, Pforzheim University.
    6. Rüdiger Waldkirch & Matthias Meyer & Karl Homann, 2009. "Accounting for the Benefits of Social Security and the Role of Business: Four Ideal Types and Their Different Heuristics," Journal of Business Ethics, Springer, vol. 89(3), pages 247-267, November.
    7. George Economides & Thomas Moutos, 2014. "Minimum Wages as a Redistributive Device in the Long Run," CESifo Working Paper Series 5052, CESifo.

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