Anton Hemerijck, Ilze Plavgo, Brian Burgoon, Daniel Alves Fernandes, Heta Pöyliö, Annika Lehmus-Sun
Social Investment Returns over the Life Course

EUI / RSC Working Paper
60 S.
,
San Domenico
,
EUI
,
2024
ISSN: 1028-3625

The principal objective of this contribution is to assess the well-being returns of social investment welfare provision in a comparative European perspective. The overarching objective of social investment welfare provision is to enhance people’s opportunities and capabilities to resolve social risks typical of post-industrial societies ex-ante, by providing early childhood education and care, vocational training over the life course, capacitating active labour market policies, work-life balance policies like paid parental leave, lifelong learning, and long-term care. Common to these policies is that they transcend – but do not replace – the compensatory rationale of post-war social security that protected (predominantly male) workers and their (stable) families against industrial risks ex-post. As an individual’s prospects of a healthy retirement correlate with whether they enjoyed a happy childhood, it is possible to conjecture a ‘life-course multiplier’ mechanism, whereby social investment returns reaped over the life course generate a positive cycle of well-being returns, in terms of employment opportunities and gender equity, competitiveness and fiscal balance, together with positive impacts on intra- and intergenerational poverty mitigation. Empirically, we proceed in the four steps, starting with a macro trend analysis of welfare state performance in statistical terms, teasing out changes in social spending in relation to gender- and age-related employment and poverty outcomes from a life-course perspective. Next, we analyse sociological panel data, using nationally representative longitudinal household survey data from 25 European countries to assess how policies jointly affect individuals’ employment chances and poverty risks across different risk groups in terms of the policy complementarities of two typical social investment policies – early childhood education and care (ECEC) and active labour market policies (ALMP) – on employment probability among families with children. While higher spending efforts on the analysed policies tend to be associated with higher employment chances and lower poverty risk, the effects are reinforced when policy efforts are combined, and weakened when they work in silos. For more in-depth illustrative purposes, we provide a detailed quantitative case study, using household panel data and various policy indicators, of one country – Germany – that has experienced a gradual transformation from a male-breadwinner welfare state to a dual-earner social investment welfare model within the span of two decades. We observe how the policy shift to promoting female employment, as part of social investment reforms, has curtailed gender gaps in poverty risks. Finally, we tease out well-being returns on social investment, with respect to employment and poverty in terms of subjective wellbeing, using the Eurofound working and living conditions survey, with respect to childcare, active labour market policies, and active ageing and flexible retirement. We show how the availability of good quality and affordable childcare is related to higher levels of life satisfaction for young families and access to lifelong learning and flexible retirement reinforces subjective well-being satisfaction for older workers.