The post-crisis European social model: developing or dismantling social investments?

Abstract

This paper offers a theoretical and empirical contribution to our understanding of the changing European social models in wake of the economic crisis and the promotion of social investments by the European Commission. Theoretically, the article provides a conceptual framework for comparative macro-analysis of social investments that takes into account how social investment policies and returns vary over the life-course and are interdependent. Empirically, the article uses this conceptual framework to examine whether EU policy strategies and national welfare reforms follow a social investment approach. Analysing developments of social investment strategies and policies in three life-stages, the article finds that many EU strategies embody elements of a social investment strategy whereas the impact of the crisis on the national level differs across countries, life-stages, and policies. In most countries, the overall policy impact of the crisis seems to be small on childcare coverage, large on youth polarization, and to increase retirement ages. The crisis will be felt in years to come with reduced life-income for younger cohorts, lower fertility laying the ground for intergenerational conflicts, and migration of skilled youth implying returns of social investments made in southern parts of Europe benefitting northern parts. That said, the overall evidence points towards social investments taking a larger role in Europe after the crisis. However, the result is unlikely to become a uniform European social investment model as the countries most in need of social investments are also the countries least likely to develop high-quality social investments.

Keywords:

• social investments
• Europeanization
• European integration
• crisis
• welfare state reforms
• social policy
• skill formation and usage

Notes

The term “crisis” has different meanings within various academic disciplines. We use “crisis” in a Schumpeterian sense to mean exogenous shock, although we are aware that many causes of the crisis are endogenous, such as private or public indebtedness, demographic changes or lack of earlier reforms of pension and labour markets.