Reforming the Welfare Society

What are the challenges for the welfare society created by global changes: demographic shifts, changes in the nature of work, and dramatic changes in the world economy, due to technological progress, organizational change, and especially globalization?

How should welfare states—with their objectives to provide social insurance, redistribution, lifecycle transfers, and access to services subject to market failures (such as education and health services)—respond to these challenges?

Reforming the welfare society is a global phenomenon relevant not just for mature industrialized economies, e.g., Germany, but also for emerging economies, e.g., BRIC countries, and is thus considered a major challenge in global economic affairs.

The central thesis of the research is that “economic incentives matter.” The research approach will have two main foci:

(i) measuring economic incentives generated by welfare policies and

(ii) deriving the behavioral implications of these incentives.

Welfare policies are to be defined broadly, to include the following areas: employment, unemployment, skills, pensions, and health.

The research area aims to examine the effectiveness of welfare policies from the perspective of economic efficiency (absence of waste) and equity (redistribution)

The research will cover both existing policies and reform proposals. The research will initially focus on Germany. The medium-term aim is to build an international research network, so that welfare policies in different countries may be compared and indications of best practice be established.