This is striking since welfare states increasingly “outcource” parts of traditional social protection to market‐based provision which is highly state subsidized, either indirectly or directly. The question whether fiscal welfare runs counter to the distributive directions of the social welfare systems, however, is difficult to answer since fiscal welfare is highly complex though not much transparent and it is challenging to combining the analysis of social and fiscal welfare.
This paper wants to contribute to the conceptual analysis of fiscal welfare. Based on empirical comparative analyses of social security outsourcing in Europe, I argue that it is not fiscal welfare per se that calls into question existing principles of solidarity but the way in which fiscal welfare is regulated. It depends on the concrete implementation of regulating principles that determine the shifts in solidarity. Focusing on social security, I will show that it is the regulation of both, the welfare markets and the linkage between these new markets and the traditional welfare systems that determine the kind and degree of solidarity shift in European societies.