The distribution of wealth and welfare state reform

Considering the narrowing fiscal scopes of unfunded social security systems, a partial completion of public insurance by private wealth formation is advocated both by politicians and academic economists. This paper presents the distribution of wealth in East and West Germany and analyses the instruments dedicated to promote personal saving. Due to the fact that the wealth differentials between households and social groups are still rather high, it is proposed to focus the saving incentive measures on lower income households and families. However, subsidizing alternative compensation schemes such as the ''investment wage'' or employee stock ownership plans turns out to be incompatible with the distributional goals mentioned above.