The Role of the Welfare State for NEETs: Exploring the Association Between Public Social Spending and NEET in European Countries

Abstract

This study explores the role of the welfare state in reducing young people not being in education, employment, or training (NEET)s across 15 European countries. Using data from the Survey of Adult Skills in the Program for the International Assessment of Adult Competencies (PIAAC) in combination with the Social Expenditure Database, we conducted cross-national analysis to reveal whether the increase in public social spending moderates the risk of being NEET at a young adult age, especially for socially disadvantaged young people. Our results highlighted that the rise of one percentage point of public social spending per gross domestic product, including social expenditure on education, active labor market, and unemployment, is significantly associated with decreasing the odds of being NEET. Furthermore, these social expenditures appeared to lower the NEET risk given socially disadvantaged backgrounds suggesting that young people with low educational levels, whose parents have low educational attainment levels, non-immigrant families, and females are likely to benefit given the robust social protection system. These findings suggest that public social spending may be an effective investment in promoting the social involvement of young people from socially disadvantaged background.