Institutional competitiveness, social investment, and welfare regimes

Article rédigé par Paul Bernard & Guillaume Boucher

Abstract :

Are the rather generous welfare regimes found in most European countries sustainable ; that is, are they competitive in a globalizing economy ? Or will they, on the contrary, be crowded out by the more austere and less expensive regimes generally found in liberal Anglo-Saxon countries ? We first discuss this issue conceptually, focusing on the notions of institutional competitiveness, social investment, and short-term and long-term productivity. We then briefly present the results of an empirical study of 50 social indicators of policies and outcomes in 20 Organization for Economic Co-operation and Development (OECD) countries during the early 2000s. We conclude that welfare regimes have not been forced to converge through a "race to the bottom." There remain three distinct ways to face the "trilemma" of job growth, income inequality, and fiscal restraint : Nordic countries achieve high labor market participation through high social investment ; Anglo-Saxon countries attain the same objective through minimal public intervention ; while Continental European countries experience fiscal pressures because their social protection schemes are not promoting participation to the same extent.

Keywords : activation, institutional competitiveness, productivity, social investment, welfare regime

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