Social Investment, Employment and Policy and Institutional Complementarities: A Comparative Analysis across 26 OECD Countries

Vincent Bakker,Olaf Van Vliet

doi:10.1017/s0047279421000386

Abstract

AbstractRaising employment has been at the heart of EU strategies for over twenty years. Social investment, by now a widely debated topic in the comparative welfare state literature, has been suggested as a way to pursue this. However, there are only a couple of systematic comparative analyses that focus on the employment outcomes associated with social investment. Analyses of the interdependence of these policies with regard to their outcomes are even more scarce. We empirically analyse the extent to which variation in employment rates within 26 OECD countries over the period 1990-2010 can be explained by effort on five social investment policies. We additionally explore the role of policy and institutional complementarities. Using time-series cross-section analyses we find robust evidence for a positive association between effort on ALMPs and employment rates. For other policies we obtain mixed results. ALMPs are the only policies for which we observe signs of policy interdependence, which point at diminishing marginal returns. Additionally, our analysis demonstrates that the interdependence of social investment policies varies across welfare state regimes. Together, this indicates that the employment outcomes of social investment policies are also contingent on the broader framework of welfare state policies and institutions.

Highlights

For over twenty years, realising higher employment levels has been at the heart of EU strategies such as the Lisbon Strategy and Europe
Across countries efforts on all social investment policies except active labour market policies (ALMPs) have converged towards a higher level over time
The data exhibit great variation in terms of the level of effort and developments thereof. When it comes to effort on ALMPs the Nordic countries are the most generous

Summary

Introduction

For over twenty years, realising higher employment levels has been at the heart of EU strategies such as the Lisbon Strategy and Europe. The Commission urged member states to “better reflect social investment in the allocation of resources [by] putting greater focus on policies such as (child)care, education, training, active labour market policies, housing support, rehabilitation and health services” ( : ). This approach is in line with the broader academic discourse on the sustainability of the welfare state, which describes the need of reorienting social policy towards programmes aimed at activation and human capital development to prepare individuals for the new social risks of the service-based economy (Taylor-Gooby, ; Armingeon and Bonoli, )

Objectives

Methods

Results

Conclusion