Taking Stock of Welfare State Convergence – Post-Industrial Changes in Risk Compensation and Social Investment in 21 OECD Countries

Within comparative welfare state research, debates on the social investment paradigm experience a boom of scholarly interest. Within the field, there is a tendency towards ever more fine-grained analyses on the effects of and citizens’ preferences towards social investment. However, these scholarly debates might be ahead of reforms towards social investment that occurred in the real world. Thus, this paper takes an opposite, big picture approach in analysing social investment vis-á-vis compensatory social spending from a convergence perspective on expenditures and labour market regulation. Taking stock of developments from 1985 to 2013, the main question is if we can witness convergence towards social investment and if this occurs along retrenchment, stability or an expansion of traditional social policies.

The papers main results suggest that social investment expands alongside traditional social policies, which is strongly driven by catch-up effects of former laggards, with the ratio of investment vs. compensatory policies remaining roughly constant. A more nuanced picture of social investment also shows convergence in its programmatic components (education, childcare, family expenditures), but also in employment enhancing policies trending towards lower unemployment benefits and the deregulation of temporary employment protection. Notably, convergence has been most pronounced in these latter aspects and the retrenchment of education expenditures, which might suggest a stronger tendency to focus on employment-first policies than on human capital investment.