Why Spend on Social Investments? Determinants of Social Investment Reforms in the Time of the Euro Crisis

Social investment has been advocated as blueprint for reforming European welfare states since the Lisbon years. Social investment reforms are however progressing to very different extents across Member States which differ enormously in terms of economic , institutional and political contexts. This paper investigates the contextual determinants of social investment reforms in the EU-27 (Croatia is excluded), from the launch of the Lisbon strategy up to the crisis aftermath (2000-2013). Various hypotheses on the potential factors braking/favouring social investment are compared. First, post-crisis austerity has been said to brake the progress of social investment: I test whether various indicators of fiscal pressure, Eurozone membership, and the signature of memoranda of understanding do in fact hinder the development of social investment. Second, labour market and economic structures can be more or less consistent with the new blueprint: labour demand should be apt to absorb the enhanced supply of human capital granted by social investments. Following this, economies based on different "growth models" (export-led or consumption-led) could profit differently from social investment, hence providing governments with different incentives to invest in those policies. Third, (how) does politics matter? The association between the colour of government and a social investment-friendly development of the welfare state is to date still largely unknown. By means of pooled CSTS analysis, my paper sheds light on the factors that cause social investment reforms to progress differently in today's multi-tiered EU.