ABSTRACT
This chapter discusses the main determinants of the financing needs of welfare systems. It turns to the different sources of revenue and patterns of welfare state funding in the advanced industrial nations. The chapter analyses the politics of taxation and financing trends in the mature welfare states. It addresses the impact of the different financing techniques upon employment and economic growth and upon the political legitimacy, and reforms possibilities of the different social protection systems. The chapter also addresses the issue of the redistributive impact of the different financing techniques and underlines the importance of analysing the dynamics between how the financial resources are raised and spent. It also discusses the current and future challenges to welfare state financing in the face of increased globalisation and ageing populations. The chapter summarises the key lessons to be learnt from the analysis of welfare state financing.
