The Dualizations of Europe

Following the great recession of the early 21st century, a dualization within Europe has emerged, with the Northern countries faring much better in terms of growth and employment, but also in income and poverty rates, than the Southern and Eastern periphery of the continent. Simultaneously, all of Europe is plagued by a second dualization, one between the old and the young.  Youth have been the hardest hit by the negative impacts of the crisis (unemployment, job precariousness, increase in poverty risk), whereas the older population has seen relative stability. In this paper, we argue for the central role of policy, which leads to this dual dualization. We demonstrate that investment-centered policies (in education, family, active labor market policies) determine divergence in national-level outcomes of dualization.  Those countries which maintained social investment levels since 2010 will have lower poverty, unemployment, job precariousness, than those who have dis-invested in such policies after the crisis.  Current policies are expected to widen the gap in skills, poverty levels, and economic growth between Northern and Southern Europe.  Simultaneously, the policy decisions to insulate the elderly by legislating almost no cuts to current pension expenditures, widen the intergenerational gap across the entire continent. We expect that these policy outcomes have significant electoral consequences, with young people increasingly abstaining from elections, or turning to youth-specific are radical right parties, compared with pre-crisis times. We test our propositions using economic and social indicators from the Eurostat and OECD, as well as electoral data from the European Social Survey