Welfare economics is a branch of economics that focuses on the optimal allocation of resources and goods. This course integrates discussions relating economic theories to different notions of social justice and historical developments of welfare state. Welfare state theories and concepts are discussed during the course not only in terms of equity reasons but in efficiency terms also. The course introduces crucial debates about the borderline between state and market. Various aspects of welfare state are analysed with help of two broad questions: what are the aims of policy and by what methods those aims are best achieved? Each society faces questions related to scope of redistribution (of wealth, income, power etc. and how much of it should be there) and methods that are employed to organise economic activities (market, central planning, mixed economy) in order to achieve societal economic and social goals. Those two broad sets of questions are the main axis for discussions during the course. In order to enhance such discussions the course examines origins and dissemination of welfare state, two main social welfare traditions (Bismarckian and Beveridgean) as well as comparative welfare state typologies (liberal, conservative and social-democratic). Basic principles of social insurance, role of private and public sector in social insurance provision are covered during the course. The course examines in detail retirement pensions and their financing mechanisms (pay as you go and funded), social assistance principles, its organisational aspects and main types of benefits. Special attention during the course is paid to income inequality, poverty and social exclusion, their measurement methods. International aspects of social security regulation are also discussed.