A welfare state is the name for all of the social benefits and services that a government provides to support the social welfare of its people. These services often include free education, free health care and financial support for the old, disabled, and unemployed. A welfare state is a concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of outcome, equitable distribution of wealth, and public responsibility for those who are wealthy enough to afford social services. The welfare state involves a transfer of resources (especially revenue) from the state, to the services provided (i.e. healthcare, education, etc.), as well as directly to individuals (“benefits”). It is funded through taxation. Such taxation usually includes a larger income tax for people with higher incomes, called a progressive tax. This helps to reduce the income gap between the rich and poor. The world-wide Great Depression was an important factor that lead to the introduction of the welfare state in many countries. During the Great Depression, the welfare state was seen as a “middle way” between the extremes of communism on the left and unregulated laissez-faire capitalism on the right. The activities of present-day welfare states extend to the provision of both cash welfare benefits (such as old age pensions or unemployment benefits) and in-kind welfare services (such as health or childcare services). Examples of these kinds of benefits and services can be seen in table 2. A breakdown of how some selected countries spend their social budgets can be seen in figure 1.

Source: http://global.britannica.com/topic/welfare-state

Figure 1. Social spending in selected countries