Abstract

This article focuses on the welfare state, which includes social protection, health, education and training, housing, and social services, but can also be conceived more broadly to include policies that affect earnings capacity and the structure of the labour market. It discusses the difficulties of capturing the impact of the welfare state on income inequality, given that one does not observe what the distribution would be in the absence of the welfare state or specific aspects of it. Theories of welfare state redistribution are reviewed, and the conventional categorization into welfare ‘regimes’ discussed. The empirical evidence about the extent and nature of redistribution by the welfare state is described, including noncash services as well as cash transfers, and the impact on poverty in particular is discussed. Economic inequality is also strongly affected by the political process, and vice versa.