Abstract Chapter 4 represents a quantitative bridge between the theory of the welfare commons and the empirical country case studies. The objective is to gain a bird’s eye understanding of how different European Union (EU) welfare states perform on policy outcomes, drawing on available quantitative economic and social indicators. The theoretical expectations of this chapter are strongly informed by recent advances in life-course sociology. There are two anticipated macroeconomic benefits of social investment reform, which lie in the cumulative advantages households gain from social investment support over their life courses. First, a so-called ‘social investment dividend’ refers to how improved household outcomes lead to better socio-economic outcomes, such as higher employment and lower poverty rates. Second, the ‘social investment multiplier’ highlights how micro-level investments yield amplified socio-economic returns. By improving labour-market conditions, social investments expand the tax base and reduce reliance on ex-post interventions, thereby enhancing fiscal capacity and securing sustainable financing for inclusive welfare provision. The chapter contrasts the positive externalities of the social investment multiplier dynamic with prevailing theories emphasizing trade-offs or trilemmas in welfare state performance. The empirical analysis reveals that mature welfare states in North-West Europe successfully combine inclusive growth with financial stability. Meanwhile, maturing welfare states, particularly in Eastern Europe, have benefitted from upward convergence in recent years but face challenges in sustaining progress, calling for more assertive social investment reforms in the near future.

Abstract The social investment turn across Europe has strengthened the portent of in-kind service provision alongside traditional compensatory transfers. Service expansion has particularly alleviated family and old-age care responsibilities for both caregivers of immediate and extended family members. This article examines the policy complementarities between family and old-age care services and income protection buffers by testing whether easing life-course transitions, first through income security and then by capacitating welfare services, leads to higher life satisfaction. Linear regression results based on the European Social Survey (2002–2020), combined with social policy data from the OECD and Eurostat, demonstrate positive subjective well-being returns to higher in-kind social spending on families and old age when income compensation sufficiently safeguards against poverty. Therefore, income protection is vital for social investment services to be able to nurture effective capacitation at the individual level.

Scholars have long argued that social policies affect people's employment chances in interconnected ways, where a given policy intervention might have employment effects that are strengthened or dampened by other interventions. This article theorizes and empirically assesses how national active labor market polices (ALMP) and early childhood education and care (ECEC) interact in affecting individuals' employment chances. The objective is to address scholarly controversy over whether this policy interaction entails complementarity, substitution, or non-interaction. Analyses draw on EU-SILC individual-level true-panel survey data 2005-2019 from twenty-six European countries and aggregate policy indicators. Results show that ALMP and ECEC have complementary positive implications for employment probability among individuals with children, especially women. ALMP effort tends to have a more positive association with employment probability as ECEC effort becomes more substantial, and vice versa. Such patterns remain after controlling for individual characteristics, previous year's employment status, country fixed effects, and macro-economic conditions.

Abstract The concluding chapter synthesizes the book’s findings, providing a comparative survey of the overall direction of welfare state transformation across the case studies and overarching chapters, supplemented by several headline indicators. It reckons that European welfare states have experienced a convergent, yet non-linear shift towards social policies that prioritize human capital development and more gender-sensitive life-course and labour market transitions whilst striving to maintain and even improve the inclusivity of social safety nets in knowledge economies and ageing societies. This conversion has been driven by rapid socio-economic restructuring, including rising female employment, ageing populations, tightening labour markets, etc. Equally if not important has been the imperative of ensuring the sustainability of popular welfare commitments. This double bind prompted policymakers to enhance labour market participation and productivity, especially when and where retrenchment reform proved politically difficult. Increasingly carving a foreground role in the process, European Union (EU) institutions raised the cognitive and normative stakes of social investment. Notwithstanding real progress, the more sobering conclusion is that the social investment reform thus far lacks assertive political conviction. Cognitive biases and electoral uncertainty prevent governments from taking pride in social investment reform, despite obvious benefits. The chapter ends by underscoring the potential of social investment to act as a democratic bulwark against institutional backsliding. The ‘welfare commons’ tying citizens across generations through education, care, and protection can temper polarization and reinforce political stability. If sustained, the social investment turn offers the best way to continue to civilize a resilient capitalism and a robust democracy.

Social policy discourse in Germany is often dominated by the perception that welfare measures primarily constitute a financial burden. Challenging this view, Fabian Mushövel and Anton Hemerijck argue in “Education as Investment” that contemporary social policy should instead be understood through the lens of social investment. From this perspective, targeted public spending—particularly in areas such as education and human capital development—is not merely redistributive but can generate substantial long-term economic returns. By enhancing individuals’ skills, productivity, and participation, social investment policies contribute to sustainable growth and societal resilience, reframing welfare spending as a strategic and future-oriented investment.

In this article, we explore the normative foundations of the social investment welfare state. Social investment welfare enhances ex ante individuals’ opportunities and capabilities to resolve the social risks typical of post-industrial societies – via early childhood education and care, vocational training over the life course, active-labour-market capacity-building and policies for work-life balance, such as paid parental leave, lifelong learning and long-term care. Social investment transcends, while not replacing, the compensatory rationale of mid-20th-century social security. We begin by lamenting the prolonged disconnect between social policy research and normative political theory since the 1990s, which is worrisome against the background of significant welfare state change. We address the shortcomings of a purely Rawlsian-distributive reconstruction of the social investment policy turn, while rejecting the ‘luck egalitarian’ interpretation and its tacit conflation with Third Way welfare reform. Our normative framework for social investment takes heed of Elizabeth Anderson's relational understanding of justice and work by Jonathan Wolff and Avner de-Shalit on ‘secure’ capabilities and ‘fertile’ functionings, which builds on Amartya Sen's critique of John Rawls. Finally, we delineate our concept of stepping-stone solidarity as the normative anchor of social investment welfare.

Abstract This book primarily explores the welfare policy responses to the Great Recession—reform trajectories that swept across Europe over the last decade–with a final chapter that focuses on Covid-19 welfare management. The 2008 crash marked a critical stress test for European welfare states with dramatic repercussions, including a massive surge in unemployment, a widening in wage and income disparities, and rising poverty. Hikes in fiscal deficits and public debt, required to pre-empt an economic meltdown, forced policymakers to make painful cuts in welfare services to shore up public finances, thereby jeopardizing welfare support for vulnerable groups. The overall scope of welfare policy responses is heterogeneous, disparate, and uneven. In some cases, the response to the Great Recession was accompanied by deep social conflicts, while in others unpopular crisis management measures received broad consent from opposition parties, trade unions, and employer organizations. Alongside serious retrenchments, there have been assertive attempts to rebuild social programmes and institutions, to accommodate policy repertoires–not merely domestically but also at the EU level–to the new realities of the knowledge economy and an ageing society. Overall, the long 2010s showed that the future of work and welfare is in our hands: it is perfectly possible to shape this future in such a way as to provide inclusive social security, achieve high employment, advance and maintain human capabilities across the life-course, and fight poverty and inequality.

Abstract This chapter covers the evolution of the EU social agenda in the wake of the Great Recession in three periods: ‘conservative reflex’ (2009–2012), ‘paradigm contestation and social crisis acknowledgement’ (2013–2014), and ‘Social Europe resurgence’ (2015–2019). From 2010, low growth, high unemployment, and falling investments, together with deepening poverty and social exclusion—especially in countries adversely affected by the eurozone crisis—triggered a search process as to how the EU can reliably support inclusive welfare provision across member states. The weakening of the ‘expansionary austerity’ paradigm gave new impetus to social Europe, from the launch of the Social Investment Package (SIP) in 2013 up to the endorsement of the European Pillar of Social Rights (EPSR) in 2017. The commitment of the commission president, Ursula von der Leyen, to an ambitious social agenda, against the background of the Covid-19 pandemic, seems to have codified the resurgence of Social Europe.

Abstract In Chapter 2, we take stock of how, since the 1980s, many economists, political scientists, and sociologists studying the welfare state have gradually come to view social policy in terms of redistributive economics and politics. For the founding fathers, including J.M. Keynes and W.H. Beveridge, the modern welfare state held out a promise of full employment (admittedly for men), basic income security, access to good quality health care, and widening educational opportunities. For our theoretical perspective, we return to this earlier tradition, however, by adding the family gender dimension. As women have entered the labour market en masse, the relationship between families, markets, and state-level policies, has changed in a transformative fashiond. We view social policy in terms of three complementary social investment functions: buffers, flows, and stocks. New evidence suggests that the quality of social investment positively affects long-term growth by raising employment and improving productivity by enhancing people’s capabilities to ex ante resolve the gendered social risks of post-industrial societies, whilst ensuring the high levels of employment of both men and women needed to sustain popular welfare states.

Abstract In this introductory chapter, we celebrate the welfare state as the unsung hero of the Great Recession and the Covid-19 pandemic that followed. Perhaps surprisingly, European welfare states cushioned the financial crisis and its social and economic aftershocks well. In addition, the more generous and capacity-building welfare states of north-western Europe bounced back promptly on most relevant performance indicators: GDP growth, employment, productivity, competitiveness, and fiscal balance, all at lower levels of poverty compared with the leaner Anglo-liberal welfare states and the more pension-biased ones of southern Europe. In response to the pandemic, the EU came together in a manner unthinkable a decade earlier. How to make sense of this transformative—swift and decisive—watershed? Two explanatory factors joined forces: one is strictly related to the existential health predicament of the pandemic; the second explanation is best understood in terms of a longer-drawn-out experiential lesson of the Great Recession.

European welfare states have experienced a binary transformation characterized by recalibration of traditional social protection programs and expansion of employment-oriented social policies, favoring the emergence of dual-earner families. This article sheds a new light on the pathways leading to these transformations in continental Europe. Theoretically, we characterize continental European welfare states as a configuration of complementary and interacting labor market and social policy provisions. We conjecture that such welfare state types are prone to evolve through a sequential process of institutional change where new social policy provisions emerge to correct and enhance the effectiveness of previously implemented labor market policies in pursuit of novel policy objectives. The timing and pace of this sequence is mediated by governments' cognitive orientations and their responsiveness toward domestic societal interests. Through a qualitative comparative process analysis, we find evidence of our theorized three-pronged sequence of institutional change in the Netherlands, Germany, and Italy.

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.

Abstract In this chapter, we trace the progress of European welfare states towards reconciling economic prosperity and social cohesion at the macro-level. We do this by looking at a set of economic and social indicators, comparing performance in 2007 and 2019. We find that in terms of spending and (most) outcomes the welfare state was in better shape when Covid-19 broke out than it used to be in the more carefree days before the global financial crisis. Some developments do give cause for concern. Income inequality rose, though its overall growth was rather limited; economic growth was slow; wage growth was even slower; (male) employment growth was disappointing; demographic ageing has advanced; tax rebalancing remains inadequate; and training systems seem ill-prepared for the digital transition. Nevertheless, compared with other parts of the world, Europe continues to offer an attractive combination of economic prosperity, lower inequality, and higher social mobility.

Abstract In this chapter we offer a brief exposition of the EU’s policy response to the eurozone crisis. We find that the resolve of policymakers at the periphery to keep their countries in the euro area (even when it meant electoral suicide), the willingness of voters there to put up with bitter medicine (if that was the price of EMU membership), and the commitment of core countries to the integrity of the eurozone (albeit grudging and at times verging on vengeful) were all decisive. Moreover, macroeconomic governance in the eurozone has evolved considerably from the immediate reaction to the crisis, and has advanced by leaps and bounds since 2020. Still, a bias persists in EMU governance, with fiscal imbalances being more stringently defined and less leniently treated than macroeconomic imbalances, while the banking union remains incomplete without a common deposit-insurance system and a fiscal backstop to the Single Resolution Mechanism.

Abstract This chapter investigates whether and in what ways European governments departed from the austerity-dominated paradigm of welfare reform after 2014. It explores the direction of change and relative coherence between the functions of social protection, activation, and capacitation, in twelve European countries, in 2015–2019. Drawing on data from national legislation, social policy reform is tracked across the life-course arenas of family policies and work–care reconciliation, lifelong education, employment, and retirement, distinguishing between regressive/exclusionary and progressive/inclusive adaptations. Overall, we observe welfare expansion and recalibration towards more integrated social investment policy mixes, especially regarding lifelong education and gender-balanced activation. This includes countries which had pursued austerity up to 2014. Nevertheless, significant cross-country variation remains in the extent to which policies have been aligned, with some pursuing a ‘synergy-oriented’ approach and others more ambivalent reform trajectories. A minority of cases remained skewed towards transfer retrenchment and deregulatory labour market flexibilization.

With the evolution towards more service-intensive social investment welfare states across Europe, research on the institutional capacities of subnational welfare provision is increasingly relevant. Based on a comparative case analysis of three post-industrial municipalities in Europe, this article harbors a two-pronged objective: first, empirically, to show how regional and local governance capabilities are crucial to effective SI policy delivery; second, more positively, to bring out the proficiency of vertical coordination between national administration and subnational layers, alongside the critical role of horizontal policy discretion at the local level to align social benefits and capacitating services for the success of SI delivery; and, by implication, the overall responsiveness of national welfare systems to the changing nature of 21st century socioeconomic risks.

Abstract In this chapter we assert that the welfare state’s resilience stems from its contribution to prosperity: successful market economies and liberal democracies cannot perform without effective welfare states. Received opinion has not yet fully acknowledged this fact. Like Third International spokesmen in the 1930s confidently announcing the imminent end of capitalism, many have predicted the welfare state’s demise. Half a century on, the welfare state is in rude health. Putin’s attack on Ukraine has, if anything, strengthened European solidarity. We now enter a post-neoliberal world. The notion that the EU can advance as a mere project of market integration is being abandoned. The new social compass requires a macroeconomic policy environment that allows all national economies to prosper; sustained investment in the health and skills of Europeans, on which future prosperity relies; and a shared appreciation that a robust welfare state is the secret to Europe’s success.