Rethinking corporate welfare: Unpacking its meaning and misconceptions
DOI:
https://doi.org/10.18559/ebr.2026.3.2814Keywords:
market failure, public policy, corporate welfare, welfare states, state-aidAbstract
The main goal of the article is to propose a new definition of corporate welfare, a concept coined in the 1970s to describe the state’s support for entrepreneurs and counterbalance criticisms of the welfare state. Based on a critical review of the literature on historical origins and existing definitions, a new approach has been proposed, which offers objectivity, applicability, and integration with the concept of social welfare. Moreover, clearly embedding the concept of corporate welfare within the theory of market and state failures links the new definition with the existing theory of public economics and institutional economics. The discussion of corporate welfare is exemplified by two case studies to illustrate the boundaries of the proposed definition and demonstrate the adequacy of the theoretical framework (available in Appendix C).
JEL Classification
Government Expenditures and Welfare Programs (H53)
Governmental Loans • Loan Guarantees • Credits • Grants • Bailouts (H81)
Government Policy • Provision and Effects of Welfare Programs (I38)
Capitalist Institutions • Welfare State (P16)
Downloads
References
Abramovitz, M. (1983). Everyone is on welfare: ‘The role of redistribution in social policy’ revisited. Social Work, 28(6), 440–445. https://doi.org/10.1093/sw/28.6.440
View in Google Scholar
DOI: https://doi.org/10.1093/sw/28.6.440
Abramovitz, M. (2001). Everyone is still on welfare: The role of redistribution in social policy. Social Work, 46(4), 297–308. https://doi.org/10.1093/sw/46.4.297
View in Google Scholar
DOI: https://doi.org/10.1093/sw/46.4.297
Acemoglu, D., & Robinson, J. A. (2019). Rents and economic development: the perspective of Why Nations Fail. Public Choice, 181(1–2), 13–28. https://doi.org/10.1007/s11127-019-00645-z
View in Google Scholar
DOI: https://doi.org/10.1007/s11127-019-00645-z
Angresano, J. (2016). A corporate welfare economy. Routledge.
View in Google Scholar
Arrow, K. J. (1951). An extension of the basic theorems of classical welfare economic. Proceedings of the Second Berkeley Symposium
View in Google Scholar
DOI: https://doi.org/10.1525/9780520411586-038
Arrow, K. J., & Debreu, G. (1954). Existence of an equilibrium for a competitive economy. Econometrica, 22(3), 265–290. https://doi.org/10.2307/1907353
View in Google Scholar
DOI: https://doi.org/10.2307/1907353
Bader, E., Huff, D., & Reynolds, L. (2003). Shadow welfare. The Social Policy Journal, 2(4), 39–51. https://doi.org/10.1300/j185v02n04_04
View in Google Scholar
DOI: https://doi.org/10.1300/J185v02n04_04
Baumol, W. J. (1990). Entrepreneurship: Productive, unproductive, and destructive. Journal of Political Economy, 98(5), 893–921. https://doi.org/10.1086/261712
View in Google Scholar
DOI: https://doi.org/10.1086/261712
Bennett, D. L. (2025). Political economy of entrepreneurship policy. In R. Jong-A-Pin & C. Bjørnskov (Eds.), Elgar encyclopedia of public choice (pp. 563–570). Edward Elgar Publishing. https://doi.org/10.4337/9781802207750.00083
View in Google Scholar
DOI: https://doi.org/10.4337/9781802207750.00083
Bennett, J. T., & DiLorenzo, T. J. (1982). The political economy of corporate welfare: Industrial revenue bonds. Cato Journal, 2(2), 607–617.
View in Google Scholar
Bergstrom, K., & Dodds, W. (2021). The targeting benefit of conditional cash transfers. Journal of Public Economics, 194, 104330. https://doi.org/10.1016/j.jpubeco.2020.104330
View in Google Scholar
DOI: https://doi.org/10.1016/j.jpubeco.2020.104330
Bulfone, F., Ergen, T., & Kalaitzake, M. (2023). No strings attached: Corporate welfare, state intervention, and the issue of conditionality. Competition & Change, 27(2), 253–276. https://doi.org/10.1177/10245294221101145
View in Google Scholar
DOI: https://doi.org/10.1177/10245294221101145
Bürbaumer, B., & Pinsard, N. (2025). The corporate welfare turn of state capitalism in France: Reassessing state intervention in the French economy, 1945–2022. Economy and Society, 54(2), 283–309. https://doi.org/10.1080/03085147.2025.2506268
View in Google Scholar
DOI: https://doi.org/10.1080/03085147.2025.2506268
Culpepper, P. D. (2015). Structural power and political science in the post-crisis era. Business and Politics, 17(3), 391–409.
View in Google Scholar
DOI: https://doi.org/10.1515/bap-2015-0031
Culpepper, P. D., & Reinke, R. (2014). Structural power and bank bailouts in the United Kingdom and the United States. Politics & Society, 42(4), 427–454. https://doi.org/10.1177/0032329214547342
View in Google Scholar
DOI: https://doi.org/10.1177/0032329214547342
Darrough, M., Kim, H., & Zur, E. (2019). The impact of corporate welfare policy on firm-level productivity: Evidence from unemployment insurance. Journal of Business Ethics, 159(3), 795–815. https://doi.org/10.1007/s10551-018-3817-2
View in Google Scholar
DOI: https://doi.org/10.1007/s10551-018-3817-2
Dawkins, C. E. (2002). Corporate welfare, corporate citizenship, and the question of accountability. Business & Society, 41(3), 269–291. https://doi.org/10.1177/0007650302041003002
View in Google Scholar
DOI: https://doi.org/10.1177/0007650302041003002
de Rugy, V., & DeHaven, T. (2020, March 31). Corporate welfare: Beyond the budgetary cost. Mercatus Center Policy Brief.
View in Google Scholar
DeHaven, T. (2012, July 25). Corporate welfare in the federal budget. CATO Institute Policy Analysis, 703. https://www.cato.org/sites/cato.org/files/pubs/pdf/PA703.pdf
View in Google Scholar
Ebeke, C., Jovanovic, N., Valderrama, L., & Zhou, J. (2021). Corporate liquidity and solvency in Europe during COVID-19: The role of policies. IMF Working Papers, 56. https://doi.org/10.5089/9781513570914.001
View in Google Scholar
DOI: https://doi.org/10.5089/9781513570914.001
Egan, D. (2004). Who put the “welfare” in “corporate welfare”? Race, gender, and the critique of business subsidies. Journal of Poverty, 8(3), 1–21. https://doi.org/10.1300/j134v08n03_01
View in Google Scholar
DOI: https://doi.org/10.1300/J134v08n03_01
Evenett, S., Jakubik, A., Martín, F., & Ruta, M. (2024). The return of industrial policy in data. World Economy, 47(7), 2763–2788. https://doi.org/10.1111/twec.13608
View in Google Scholar
DOI: https://doi.org/10.1111/twec.13608
Fairfield, T. (2015). Structural power in comparative political economy: perspectives from policy formulation in Latin America. Business and Politics, 17(3), 411–441. https://doi.org/10.1515/bap-2014-0047
View in Google Scholar
DOI: https://doi.org/10.1515/bap-2014-0047
Farnsworth, K. (2012). Social versus corporate welfare. Palgrave Macmillan.
View in Google Scholar
DOI: https://doi.org/10.1057/9780230361539
Farnsworth, K. (2013). Bringing corporate welfare. Journal of Social Policy, 42(1), 1–22. https://doi.org/10.1017/s0047279412000761
View in Google Scholar
DOI: https://doi.org/10.1017/S0047279412000761
Farnsworth, K. (2015). The British corporate welfare state: Public policies for private companies. Sheffield Political Economy Research Institute.
View in Google Scholar
Farnsworth, K. (2019). Towards a whole-economy approach to the welfare state: Citizens, corporations and the state within the broad welfare mix. In E. Heins, C. Needham & J. Rees (Eds.), Social Policy Review 31: nalysis and debate in social policy (pp. 71–100). Bristol University Press. https://doi.org/10.1332/policypress/9781447343981.003.0004
View in Google Scholar
DOI: https://doi.org/10.1332/policypress/9781447343981.003.0004
Farnsworth, K. (2021). Business and the (corporate) welfare state. In A. Kellow, T. Porter, & K. Ronit (Eds.), Handbook of business and public policy (pp. 278–297). Edward Elgar Publishing.
View in Google Scholar
DOI: https://doi.org/10.4337/9781788979122.00024
Fink, C. (2022). Calculating private and social returns to COVID-19 vaccine innovation. WIPO Economic Research Working Paper, 68. https://doi.org/10.34667/tind.46653
View in Google Scholar
DOI: https://doi.org/10.2139/ssrn.4422279
Gills, B. K. (2008). The swinging of the pendulum: The global crisis and beyond. Globalizations, 5(4), 513–522. https://doi.org/10.1080/14747730802567389
View in Google Scholar
DOI: https://doi.org/10.1080/14747730802567389
Huff, D., & Johnson, D. (1993). Phantom welfare: Public relief for corporate America. Social Work, 38(3), 311–316. https://doi.org/10.1093/sw/38.3.311
View in Google Scholar
DOI: https://doi.org/10.1093/sw/38.3.311
Juhász, R., Lane, N., Oehlsen, E., & Pérez, V. C. (2023). The who, what, when, and how of industrial policy: A text-based approach. STEG Working Paper, 50. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4198209
View in Google Scholar
DOI: https://doi.org/10.2139/ssrn.4198209
Juhász, R., Lane, N., & Rodrik, D. (2024). The new economics of industrial policy. Annual Review of Economics, 16, 213–242. https://doi.org/10.1146/annurev-economics-081023-024638
View in Google Scholar
DOI: https://doi.org/10.1146/annurev-economics-081023-024638
Kattel, R., & Mazzucato, M. (2018). Mission-oriented innovation policy and dynamic capabilities in the public Sector. Industrial and Corporate Change, 27(5), 787–801. https://doi.org/10.1093/icc/dty032
View in Google Scholar
DOI: https://doi.org/10.1093/icc/dty032
Klebaner, S. (2024). The regulation of the corporate welfare policy. Evidences from France. MPRA Paper, 121965. https://mpra.ub.uni-muenchen.de/121965/
View in Google Scholar
Lin, J. Y., Yang, Z., Li, Y., & Zhang, Y. (2022). Development strategy and the MSMEs finance gap. Journal of Government and Economics, 5, 100034. https://doi.org/10.1016/j.jge.2022.100034
View in Google Scholar
DOI: https://doi.org/10.1016/j.jge.2022.100034
Mazzucato, M. (2013). The entrepreneurial state: Debunking public vs private sector myths. Penguin Books.
View in Google Scholar
McGee, R. (2003, April 3–6). Trade policy as corporate welfare: The case of the U.S. steel industry. 15th Annual Conference of the International Academy of Business Disciplines. Orlando. USA.
View in Google Scholar
DOI: https://doi.org/10.2139/ssrn.410817
Milke, M. (2007). Corporate welfare: A $144 billion addiction. The Fraser Institute.
View in Google Scholar
Nader, R. (2000). Cutting corporate welfare. Seven Stories Press.
View in Google Scholar
Nykiel-Mateo, A. (2009). Pomoc państwa a ogólne środki interwencji w europejskim prawie wspólnotowym. Wolters Kluwer.
View in Google Scholar
O’Connor, N., & Sweeney, P. (2016). Crisis and corporate welfare. In M. P. Murphy & F. Dukelow (Eds.), The Irish welfare state in the twenty-first century (pp. 261–285). https://doi.org/10.1057/978-1-137-57138-0_12
View in Google Scholar
DOI: https://doi.org/10.1057/978-1-137-57138-0_12
Olson, P., & Champlin, D. (1998). Ending corporate welfare as we know it: An institutional analysis of the dual structure of welfare. Journal of Economic Issues, 32(3), 759–771. https://doi.org/10.1080/00213624.1998.11506078
View in Google Scholar
DOI: https://doi.org/10.1080/00213624.1998.11506078
Piechucka, J., Saurí-Romero, L., & Smulders, B. (2023). Industrial policies, competition, and efficiency: The need for state aid control. Journal of Competition Law & Economics, 19(4), 503–526. https://doi.org/10.1093/joclec/nhad014
View in Google Scholar
DOI: https://doi.org/10.1093/joclec/nhad014
Rodrik, D. (2014). Green industrial policy. Oxford Review of Economic Policy, 30(3), 469–491. https://doi.org/10.1093/oxrep/gru025
View in Google Scholar
DOI: https://doi.org/10.1093/oxrep/gru025
Ruane, S. (2013). “Bringing corporate welfare in”—and pushing further at the boundaries of social policy: A reply to Farnsworth (1). Journal of Social Policy, 42(1), 23– 29. https://doi.org/10.1017/s0047279412000773
View in Google Scholar
DOI: https://doi.org/10.1017/S0047279412000773
Sawulski, J., Bąkowska, K., & Gniazdowski, M. (2020). Luka CIT w Polsce w latach 2014–2018. Polish Economic Institute.
View in Google Scholar
Schlomach, B., Slivinski, S., & Hohman, J. M. (2019). Multilateral disarmament: A state compact to end corporate welfare. Mackinac Center for Public Policy.
View in Google Scholar
Slivinski, S. (2007). The corporate welfare state. How the federal government subsidizes US businesses. CATO Institute Policy Analysis, 592. https://www.cato.org/sites/cato.org/files/pubs/pdf/pa592.pdf
View in Google Scholar
Sobel, R. S. (2008). Testing Baumol: Institutional quality and the productivity of entrepreneurship. Journal of Business Venturing, 23(6), 641–655. https://doi.org/10.1016/j.jbusvent.2008.01.004
View in Google Scholar
DOI: https://doi.org/10.1016/j.jbusvent.2008.01.004
Stiglitz, J. (1991). The invisible hand and modern welfare economics. NBER Working Papers, 3641. https://doi.org/10.3386/w3641
View in Google Scholar
DOI: https://doi.org/10.3386/w3641
Stiglitz, J. (2021). The proper role of government in the market economy The case of the post-COVID recovery. Journal of Government and Economics, 1, 100004. https://doi.org/10.1016/j.jge.2021.100004
View in Google Scholar
DOI: https://doi.org/10.1016/j.jge.2021.100004
Stiglitz, J., & Rosengard, J. K. (2015). Economics of the public sector. W.W. Norton & Company.
View in Google Scholar
Stoesz, D. (1986). Corporate welfare: The third stage of welfare in the United States. Social Work, 31(4), 245–249. https://doi.org/10.1093/sw/31.4.245
View in Google Scholar
DOI: https://doi.org/10.1093/sw/31.4.245
Titmuss, R. (1965). The role of redistribution in social policy. Social Security Bulletin, 28(6), 14–20.
View in Google Scholar
UOKiK. (2024). Raport o pomocy publicznej w Polsce udzielonej przedsiębiorcom w 2023 roku. https://uokik.gov.pl/Download/1096
View in Google Scholar
Walewski, M., Boguszewski, R., Piłat, A., & Koc, M. (2024). Efekty gwarancji de minimis – raport z badania 2024. BGK Polish Development Bank.
View in Google Scholar
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Adam Piłat
This work is licensed under a Creative Commons Attribution 4.0 International License.
