Problems of Equity in the Welfare State: Taxation, Social Welfare Transfers and the Fairness of One's Income from Employment (Gerechtigkeitsprobleme im Wohlfahrtsstaat: Besteuerung, Wohlfahrtsstaatliche Transfers und die Gerechtigkeit des eigenen Erwerbseinkommens)

40 Pages Posted: 21 Feb 2008

See all articles by Stefan Liebig

Stefan Liebig

affiliation not provided to SSRN

Jürgen Schupp

German Institute for Economic Research (DIW Berlin); Institute for Sociology, Freie Universität; The Institute for the Study of Labor (IZA)

Date Written: April 2007

Abstract

Problems of equity in the welfare state: taxation, social welfare transfers and the fairness of one's income from employment The article discusses the conflict of goals between fair compensation for performance and equitable support based on need in modern welfare states, which is a subject of controversy in various disciplines. It answers the question of the extent to which this policy problem of modern welfare states, which is an issue at the macrosocial level, also creates individual perceptions of problems of equity. Based on survey results of a theory-driven supplemental survey of the longitudinal study of the German Socio-economic Panel (SOEP), it was investigated how employed persons evaluated their income with respect to the fairness of earnings and what effect welfare state interventions have. An important result of the analyses is the high proportion of persons who considered their earned income to be fair. Only a quarter of those employed in Germany consider their remuneration to be unfair. Thus it appears that the normative conflict of goals between fair compensation for performance and equitable support based on need described in the literature for the macrosocial level does not really exist at the individual level, as the article discusses theoretically with reference to new multidisciplinary work and also demonstrates empirically. An unexpected result of the analyses is that transfer payments by the government cannot compensate for perceptions of unfairness with regard to individual income; openly recognizable transfer payments may be seen as discriminatory.

Note: Downloadable document is in German.

Keywords: Gerechtigkeit, Wohlfahrtsstaat, SOEP

JEL Classification: A14, D01, D63

Suggested Citation

Liebig, Stefan and Schupp, Juergen, Problems of Equity in the Welfare State: Taxation, Social Welfare Transfers and the Fairness of One's Income from Employment (Gerechtigkeitsprobleme im Wohlfahrtsstaat: Besteuerung, Wohlfahrtsstaatliche Transfers und die Gerechtigkeit des eigenen Erwerbseinkommens) (April 2007). SOEP Paper No. 17. Available at SSRN: https://ssrn.com/abstract=1096098 or http://dx.doi.org/10.2139/ssrn.1096098

Stefan Liebig (Contact Author)

affiliation not provided to SSRN ( email )

Juergen Schupp

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, D-10117
Germany
+49 30 8 978 9238 (Phone)
+49 30 8 978 9109 (Fax)

HOME PAGE: http://www.diw.de/deutsch/das_institut/mitarbeiter/innen/26652.html?uid=jschupp

Institute for Sociology, Freie Universität ( email )

Garystr. 55
I
Berlin, D-14195
Germany

HOME PAGE: http://www.polsoz.fu-berlin.de/soziologie/mitarbeiter/b_hochschullehrer/schupp.html

The Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/index_html?lang=de&mainframe=http%3A//www.iza.org/de/webcontent/personnel/fellows

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