This chapter examines the effects of public policy. It first considers economic paradigms and approaches to welfare and documents the overriding historical changes in approaches to the economy, from Keynesian ideas of macro-economic steering to more market-oriented economic perspectives. It then explores the idea of institutional complementarity, as expressed in the typologies of welfare regimes, varieties of capitalism, and flexicurity. It also looks at some of the empirical analyses of the effects of welfare policies and the tension between welfare and economic efficiency. Finally, it looks at policy feedback, path dependence, policy learning, social learning, policy transfer and policy diffusion, and policy convergence.