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  • Cited by 10
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    This chapter has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Fill, Anna 2019. The Political Economy of De-liberalization. p. 31.

    Bonoli, Giuliano Natili, Marcello and Trein, Philipp 2018. A federalist’s dilemma: Trade-offs between social legitimacy and budget responsibility in multi-tiered welfare states. Journal of European Social Policy, p. 095892871878129.

    Horn, Alexander and Kevins, Anthony 2018. Problem Pressure and Social Policy Innovation: Lessons from Nineteenth-Century Germany. Social Science History, Vol. 42, Issue. 3, p. 495.

    Hassel, Anke 2017. No Way to Escape Imbalances in the Eurozone? Three Sources for Germany’s Export Dependency: Industrial Relations, Social Insurance and Fiscal Federalism. German Politics, Vol. 26, Issue. 3, p. 360.

    Benz, Arthur 2016. Gradual Constitutional Change and Federal Dynamics – German Federalism Reform in Historical Perspective. Regional & Federal Studies, Vol. 26, Issue. 5, p. 707.

    Schieren, Stefan 2014. TAG und KiföG im Vergleich. Über die Leistungen und Grenzen informellen Regierens im Dickicht des sozialen Bundesstaats in Deutschland. Zeitschrift für Vergleichende Politikwissenschaft, Vol. 8, Issue. S1, p. 287.

    Hassel, Anke 2010. Sozialpolitik im Finanzföderalismus – Hartz IV als Antwort auf die Krise der Kommunalfinanzen. Politische Vierteljahresschrift, Vol. 51, Issue. 1, p. 95.

    Auel, Katrin 2010. BetweenReformstauandLänderStrangulation? German Co-operative Federalism Re-considered. Regional & Federal Studies, Vol. 20, Issue. 2, p. 229.

    Rothgang, Heinz Obinger, Herbert and Leibfried, Stephan 2006. The State and its Welfare State: How do Welfare State Changes Affect the Make-up of the Nation State?. Social Policy and Administration, Vol. 40, Issue. 3, p. 250.

    Campbell, Andrea Louise and Morgan, Kimberly J. 2005. Federalism and the Politics of Old-Age Care in Germany and the United States. Comparative Political Studies, Vol. 38, Issue. 8, p. 887.

  • Print publication year: 2005
  • Online publication date: September 2009

6 - Germany: co-operative federalism and the overgrazing of the fiscal commons



Conventional wisdom strongly suggests that federalism is inimical to high levels of social spending. Two arguments are prominent in this context: a veto point thesis and a ‘competition of jurisdictions’ thesis. The veto point thesis is quite straightforward: federal systems have more veto points than unitary systems ceteris paribus. This increases the probability that groups opposed to welfare state expansion can exert some influence in the legislative process. Veto points would then give these groups the opportunity to block or substantially water down redistributive legislation. ‘Competition of jurisdiction’ arguments hold that welfare redistribution is limited in federal systems because those who would pay more than they would gain in a given jurisdiction (high income earners, ‘capital’) can credibly threaten to exit highly redistributive jurisdictions and join those that are less égaliste. At the same time, those who gain more than they would pay (e.g. low income earners) are attracted to regions with higher levels of redistribution and these would therefore develop into ‘welfare magnets’. Thus, a redistributional policy stance is self-defeating in a federal context.

Indeed, many econometric studies of the determinants of welfare state spending have found that federalism exerts a statistically significant, stable and negative influence on social spending. Prominent country cases are Switzerland and the United States, both strongly federalist countries and historically, prominent welfare ‘laggards’ (although since 1980 Switzerland has moved rapidly from laggard to leadership status).

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Federalism and the Welfare State
  • Online ISBN: 9780511491856
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