ABSTRACT
Welfare state policies are a kind of state intervention designed to help citizens pool social risks and to guarantee a minimum standard of material well-being. In this chapter, we begin by outlining the historical development of welfare states during the twentieth century, and considering how they are viewed by different political ideologies. We proceed to demarcate different types of welfare states, based on the degree to which they guarantee the economic well-being of their citizens. We then discuss how welfare states may create perverse incentives, which lead to undesirable societal outcomes such as benefit fraud and welfare dependence. At the end of the chapter, we turn to the affordability of the welfare state. Here we review the complex relationship between government expenditures and economic growth, as well as the drivers of welfare state retrenchment.
