Is German federalism a function of its society or of its institutions? Understood as co-ordinating mechanisms, federal institutions are functionally predicated on generating or sustaining equilibria. But what impact do changes in independent social effects have on institutional stability? Either these equilibria are highly elastic; or there comes a tipping point of social change beyond which equilibria become increasingly costly and difficult to sustain, let alone generate. A conflagration of population aging, immigration and urbanization as well as post-industrial economic transformation has been spawning unprecedented horizontal differentiation across federations. Yet, federal institutional structures have remained largely unchanged. This observation has important implications for theorizing about the relationship between structure and institutional change: Rather than taking societal change as a harbinger of things to come, federal institutions are actually proving themselves as agents of continuity. This article examines the Federal Republic of Germany as a crucial case study where demographic and economic differentiation across the federal territory is especially pronounced. While exposing sociological reductionism in federal studies as problematic, the premise of this article is that-institutional continuity in light of societal change notwithstanding-there are good empirical reasons why the German federal system cannot be taken for granted, at least not in its current form. © 2012 Copyright Taylor and Francis Group, LLC.