In a broader sense the welfare state ex ante can be seen as a social insurance for life-time risks, and ex post as a redistribution mechanism of incomes. Sinn (1995) has developed a normative theory of the welfare state in this view. On a constitutional plain agents determine the amount of...

In this paper the welfare state is considered as insurance device. Redistributive taxation reduces the variance of life- time risk. Behind a veil of ignorance with regard to future position in society, agents decide in a two-parametric expectation/standard deviation-approach about labour supply...