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The welfare state faces a troubled future in most Western countries. The challenge is to ensure a welfare state which can adapt flexibly to external and internal changes. The present collection of papers takes as its starting point that creating a future for the welfare state requires a better understanding of how it works as a provider of public goods and private goods, social insurance, health services, and social redistribution via taxes and benefits. It is important to study how financing and operating welfare states affect people's incentives, norms and behaviour in an environment characterized by increasing mobility of both capital and labor.