The Convergence of Welfare State Indicators in Europe: Evidence from Panel Data
| Published date | 01 March 2013 |
| DOI | 10.1177/138826271301500104 |
| Author | Jörg Paetzold |
| Date | 01 March 2013 |
| Subject Matter | Article |
28 Intersentia
THE CONVERGENCE OF WELFARE
STATE INDICATORS IN EUROPE:
EVIDENCE FROM PANEL DATA
J P*
Abstract
is paper investigates whether there is a convergence in welfare state programmes
among the ‘old’ EU Member States. To identify such trends, the study relies
on net pension and net unemployment replacement rates, as well as on public
social expenditure data. Empirically, a sample of 14 economies (EU-15 excluding
Luxembourg) between 1980 and 2005 is u sed. e empirical ndings reveal the
presence of a convergence process, driven by a strong catch-up in social protection
levels in the southern Member States. Furthermore, convergence in replacement
rates is substantially less pronounced than convergence in public social expenditure.
In sum, the results indicate that the converg ing trend of public social expenditure and
unemployment bene ts has continued in advanced industri alised countries and over
time. ese ndings con rm and expand on earlier studies (Caminada et al. 2001;
Starke et al. 2008; Schmit t and Starke 2011).
Keywords: convergence; pension and unemployment replacement rates; socia l
protection; welfare state
1. INTRODUC TION
It is commonly acknowledged with in the welfare state resea rch community that t he
mature welfare states of the advanced economies in Europe have been increasingly
* Doctoral researcher at the Salzburg Centre of European Union Studies, University of Salzburg,
Mönchsberg 2, A-5020 Sa lzburg, Austria ; e-mail: joerg.paet zold@sbg.ac.at.
Parts of thi s study were completed dur ing a research v isit to the Swedish In stitute for Socia l Research
(SOFI) in Stockholm. e author would like t o thank Kenne th Nelson (Stockhol m University),
Engelbert eurl (University of In nsbruck) and Hannes W inner (University of Sa lzburg) for helpful
comments and adv ice.
e Convergence of Welfare State Indicat ors in Europe
European Jour nal of Social Sec urity, Volume 15 (2013), No. 1 29
under pressure during the la st two decades. Greater than e ver exposure to international
economic forces and competitiveness, demogr aphic transition, new socia l risks
associated with changing work and family patterns, and an increasing demand for
exible labour markets are widely identi ed as the most pressing challenges (see
Esping-Andersen 1999; Ferrera and Rhodes 20 00; Scharpf et al. 2000).
Being confronted with relat ively similar problem patter ns led to the assumption
that there is a cross-national convergence of welfare states (see Iversen and Cusack
2000; Taylor-Gooby 2004). Increasing Europea nisation and supranational initiatives
like the Lisbon Strateg y are also said to encourage convergence among the se originally
idiosyncratic welfa re regimes. In contra st to these convergence scenarios a re studies
which highli ght the mediating e e ct of di erently shaped inst itutions and emphasise
the importance of path de pendency. According to this poi nt of view, di erent welfare
regimes wil l persist and will continue to follow their nationa l trajectories, even when
challenges are compara ble (see Huber and Stephens 2001; Korpi and Palme 2003;
Pierson 1996).
e aim of th is paper is to identify the extent of convergence or divergence among
advanced European welfa re states since the 1980s. However, it has to be emphasised
that I do not attempt to analyse t he convergence of di erent institutional ty pes of
welfare regimes in Europe. It is obvious that there a re di erent models of welfare
regimes in di erent parts of Europe, and common characteri stics are sometime s
unclear and di cult to detect. Ack nowledging these institut ional di erences between
European countries , I pursue a strategy based on potential convergence of welfare
state programmes and outputs . is follows from the proposition that it may not
be all that impor tant if institutional designs are di erent, as long as they deliver
similar outcomes. Inst itutions may look di erent and may work with d istinct tools
to create welfare, but in the end, overal l welfare output is the litmus tes t for welfare
state convergence. erefore, I use three di erent social i ndicators to re ect welfare
provisions provided by individual countries. e rst indicator is a rather broad
one, namely public social expenditure. is covers all spheres of public welfare. e
replacement rates of two major social insurance programmes were used as indictors
of welfare e orts: public pensions and unemployment insurance. Public pensions
were chosen on the basis of their size – t hey are usually t he biggest budgetary item
of total social ex penditure in the cou ntries exami ned. Unemployment replacement
rates are interesting to exa mine because of their sensitivit y to changes in social policy
(see Korpi and Palme 2003: 431), and are therefore a suitable indicator of potential
convergence between welfare states.
Obviously, there has been a body of research embracing the que stion of convergence
between welfare state s. However, most of the published studie s either focus on broad,
but easily available, d ata on aggregate social expenditu re using advanced econometric
techniques (see Alsasua et al. 2007; Attia and Berenger 20 07; Kittel and Obinger
2003; Schmitt a nd Starke 2011), or on appropriate social protection indic ators like
replacement rates. Most of the second group of studies do not use sophisticated
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