The Sustainability of Welfare States into the Twenty-First Century

Abstract

Few would deny that the advanced welfare state faces a set of severe challenges. There is less agreement on what the challenges are and how important they are. The three most cited sources of crisis are population aging, family instability, and the labor market consequences of globalization and technological change. It is, however, questionable whether these affect the three dominant types of welfare systems similarly. The past decade bears witness to numerous attempts at reform and readaptation but such efforts have, so far, perpetuated or even strengthened underlying disequilibria. The result is mounting diswelfare, especially among younger households. The author examines various reform strategies (privatization, decentralization, and familialization) and concludes that these imply suboptimality. A "win-win" policy can be identified to the extent that it simultaneously maximizes fertility and women's employment and minimizes poverty risks. Greater earnings and income inequalities probably cannot be escaped, but their impact can be neutralized through a shift toward guaranteed life chances through education and skills.