ABSTRACTS & PAPERS

 

Chapter 1: Introduction
Joseph Cordes ( George Washington University, USA) and Christian Toft ( University of Kassel, Germany)

Abstract:

This volume offers a comprehensive comparative examination of recent trends, choices and conflicts in welfare state developments and reforms in the United States and European Union countries. In the introduction the volume, the three different perspectives it contains, and the individual papers are placed in the context of the international welfare state reform debate. The overall motivation of the volume and a discussion of the way in which it relates to the international welfare state debate is provided in section one. In the second section the macro-political and macro-economic perspective on the analysis of reform is developed and the Artis and Wolf and Maas papers introduced. The section will also contain an overview of the new governance structures and patterns of economic and social policymaking that have emerged as the result of the increase in the role of the European Union in Europe and changes in federal-state relations in the US and a discussion of the pressures for reform caused by the internationalisation of the economy, socio-demographic changes, and the development of new competing needs and demands for social security. In the third section a political and institutional perspective is provided and the papers by Gabel and Bernhard; Osberg and Smeeding; and Finseraas, West Pedersen and Toft introduced. A discussion will be undertaken of the links between the emergence of the new welfare state arena, changes in the wider political system and similarities and differences in values and policy preferences between America and European countries. The fourth section develops a policy perspective on the analysis of reform and introduces the papers by Cordes, Ganghof and Steuerle; Franco and Francese; Fornero and Castellino; Warren, Destefanis, and Fonseca; Whiteford and Gornick; Stoker and Toomey; and Cantillon. The papers will be placed in the context of the debate about the nature of policy change in the US and European Union countries and a review of the social and welfare implications of these changes.

CONTEXT AND CHALLENGES

Chapter 2 : Macro-economic governance and performance in the European Union and the United States and the reform of the welfare state
Michael Artis (European University Institute, Florence, Italy and University of Manchester, UK) and Holger Wolf (Georgetown University, Washington, USA

Abstract:

This paper makes a comparative analysis of macro-economic governance and economic performance in the European Union and the United States and considers the way in which differences between Europe and the US in recent macro-economic policy strategies have influenced the welfare state reform agenda. The EU will be treated as a whole, yet with special attention being paid to the Eurozone, which currently consists of a subset of 12 out of the 25 member states of the EU. Of the major European Union states, only the United Kingdom is not a member of the Eurozone. In the first section the similarities and differences between the United States and the European Union in macro-economic governance and policy coordination is examined and the extent to which economic integration in Europe during the past 20 years and the birth of the European Monetary Union in 1999 have implied the establishment of an integrated macro-economic polity that is comparable with the US counterpart is explored. The peculiar European structures - consisting of on the one hand a common currency and a European Central Bank and on the other hand a fiscal policy that is subject to a decision-making process which combines national decision-making with attempted EU-level discipline - are contrasted with the divisions of functions between the Federal Reserve System and other branches of government in the US. In the second section core indicators of economic performance and growth dynamics are compared and the macro-economic basis of Europe’s unemployment problem and America’s employment miracle is examined. The EU’s new “Lisbon strategy”, which is intended to help improve Europe’s economic performance, is critically discussed against the background of recent developments in American macro-economic performance. In the third section recent policies aiming to promote fiscal sustainability, stability, and discipline are investigated. A long-forward look is taken at Europe’s looming “pension problem”. At this point the analysis takes advantage of the collection that the EU Council of Economics and Finance Ministers has made of long range estimates (20 + years) of future demographic and age-related government spending in Europe. The findings of this discussion are contrasted with similar US studies.

Chapter 3 : Citizenship and social rights in Europe and the United States
Willem Maas ( New York University, USA)

Abstract:

Citizenship is situated at the core of contemporary debates about the transformation of the welfare state and of debates about similarities and differences in the political and social foundations of the United States and the European Union. This paper combines these two debates and examines recent directions in the development of European Union and United States citizenship. In the United States, citizenship began to develop during the eighteenth century and has evolved in response to a range of factors, including efforts to restrict rights on the basis of race, ethnicity, and gender. By contrast, the concept of a European citizenship has been motivated by European economic integration. In recent years and in the context of the debate of the establishment of a European Union constitution, proponents of further integration have been actively promoting the concept of an EU citizenship that goes beyond member state nationality. There has also been progress on improving mobility rights of individuals who are not citizens of a member state, a category know as third country nationals. In the European context, despite fledgling efforts to create an EU welfare regime, member states remain the primary focus of citizenship and social rights. In the United States, by contrast, ‘state citizenship’ long ago ceased to have much meaning, although there are periodic references to it, including in recent Supreme Court decisions concerning the portability of social rights. This chapter emphasizes the importance of citizenship and rights to the welfare state. It then engages in a comparative analysis of citizenship and rights in the US and Europe, including the extent to which Europe and the US are converging. Finally, it examines the link between concepts of citizenship and actual welfare state policies in Europe and the United States.

POLITICS

Chapter 4 : Political parties, election programmes, and welfare state policies in Europe and the United States
Matthew J. Gabel ( University of Kentucky, USA) and William Bernhard (University of Illinois, USA)

Abstract:

The American presidential and the European parliamentary systems and the related party systems constitute different frameworks for the debate about welfare state policy. In Europe perhaps even more so than in the United States, political parties are important political intermediaries which provide a central link between society and government. Much of this linkage materialises at the occasion of presidential and parliamentary elections and the preceding election campaigns are the high season of political communication between voters and their representatives. In this paper we first examine the interrelationships between democratic institutions and party systems in the United States and Europe and the recent changes in these structures. Next we determine the importance of the welfare state debate in election campaigns and the position that different political parties assume in this debate. This involves a quantitative analysis on the basis of the Manifesto Research Group database, which contains data on the contents of the election manifestos of all political parties participating in free elections since World War Two. We compare the saliency and the significance of the welfare state debate amidst other policy issues over time (from WW2 to the present), across countries ( Western Europe and the US), and across party families (mainly socialists and social democrats, liberals, Christian democrats and conservatives, and greens). The findings document a continuing cleavage between the US and European countries with regard to the importance of the welfare state and its reform as well as a gradual disillusionment of the socialist and social-democratic party family about the political do-ability of welfare state provisions.

Chapter 5 : Means or Ends? Social values for equality and preferences for state intervention in America and Europe
Lars S Osberg (Dalhousie University, Canada) and Timothy Smeeding (Syracuse University, USA)

Abstract:

Economic inequality in the United States has long been substantially greater than in many European nations, has risen over the past two decades and is continuing to rise – yet, compared to Europe, federal and state governments in the US do relatively little via taxes and transfers to reduce inequality. Why does the welfare state in America remain relatively underdeveloped? In general, policy outcomes depend jointly on the preferences of the populace and the social and political institutions that may (or may not) give expression to those preferences. However, the “preferences” of the public for policies to reduce inequality mingle the influences of: a) perceptions of what social outcomes actually are; b) perceptions of the feasible possibility of their change; c) values about desirable social outcomes and d) values about process – i.e. about the legitimate agents and mechanisms of change. This chapter uses data from International Social Survey Program (ISSP) surveys of public opinion to examine international differences in these perceptions and values. Kernel density and regression methods are used to describe the distribution of individual preferences in different countries. Although it is hard to find support for the hypothesis of systematically different preferences or perceptions on average for aggregate (in) equality in the United States as compared with Europe, there is evidence for: 1) more polarization in the valuation of equality among Americans (which is consistent with recent United States voting behaviour and opinion polling); 2) similar preferences as in other countries for “levelling down” of the top of the earnings distribution; 3) similar levels of misperception of the extent of pay differentials at the top of the distribution; 4) less concern in the US for “levelling up” of the bottom of the distribution than in other nations; 5) less acceptance of the role of government as an agent of redistributive change.

Chapter 6: The dynamics of welfare state reform in the European Union and the United States
Duco Bannink ( University of Twente, the Netherlands), Henning Finseraas (NOVA - Norwegian Social Research, Oslo), Axel West Pedersen (NOVA - Norwegian Social Research, Oslo), and Christian Toft ( University of Kassel, Germany)

Abstract:

Welfare state reform in America and Europe has not only been driven by economic, social and demographic demands and necessities but has also been influenced by the nature of the political system and the way in which this shapes the reform agenda. The politics of welfare owe as much to the interests and dynamism of parties and interest groups as to the changing needs of voters and the economy. The first section examines patterns of welfare state reform and tries to explain which countries have implemented reforms, which policy programmes have been reformed, and which new instruments and principles have been implemented and debated. The point of departure of the second section is that interest groups are embedded in an interactive relationship with the welfare state. They have both influenced its creation and maintenance and have in turn been shaped by it. In the section the diverse influences of labor unions, business groups and other lobbying organizations in creating and expanding the different elements that constitute contemporary welfare states are examined and the way in which the welfare state has molded the interest group landscapes in European countries and the US is discussed. The section also explores whether changes in the welfare state are associated with a general decline in interest group power as welfare state issues are transferred to a wider political arena or whether more diffuse interests (such as the elderly) have gained significance at the expense of organized economic interests such as business and labor.

 

POLICY ANALYSIS

Chapter 7: Tax policy and welfare state reform in the U.S. and Europe
Joseph Cordes ( George Washington University, USA), Steffen Ganghof (Max Planck Institute, Cologne, Germany), and C. Eugene Steuerle (Urban Institute, Washington, USA)

Abstract:

Taxes are intertwined with the modern welfare state in numerous ways that have varied over time and between countries. At the basic level taxation provides revenues to finance the welfare state. But national tax structures also shape the after-tax distribution of income; and some countries, such as the United States, and to a lesser extent the United Kingdom and Germany, have a stronger tradition of using the tax system to implement social welfare policythan do others such as Italy and the Scandinavian countries. The paper will examine patterns and trends in these two aspects of national tax systems in the context of the recent evolution of the welfare state constitution on each side of the Atlantic. It examines the shifts in the distribution of tax burdens that took place in the 1990s in the wake of efforts by many countries to reduce marginal tax rates on work, saving, and investment, and the degree to which these changes have reinforced or countered shifts in the pre-tax distribution of income in these countries. A fter developing a taxonomy of how the tax system can be used to implement social welfare policies, the paper also examines the similarities and differences between the United States and Europe with respect to the tax treatment of families, of low wage workers, including welfare clients aiming to enter the low wage labour market , and of private and employer provided social benefits. It considers whether recent changes in these areas imply convergence or divergence among countries in the use of the tax system as an instrument of social policy. We identify the pluses and minuses of using the tax system for social purposes, and conclude by drawing some policy lessons about the potential for and also the limits of the tax system as a policy instrument in the modern welfare state.

Chapter 8: Public pension reform in Europe and America and the search for sustainable pension systems in ageing societies
Daniele Franco and Maura Francese (The Bank of Italy Research Department)

Abstract:

The reform of pension systems is on the political agenda in most European countries and in the United States. There is a widespread need to adjust pension systems to new demographic, economic and social conditions while safeguarding their essential achievements. Pension reforms have important implications for fiscal sustainability, the labour market, income distribution and saving decisions. They also raise difficult political controversies and can affect election outcomes, especially in a context in which the median voter gets significantly older. The paper examines firstly the pension reform debate in the main European Union countries since the early 1990s and compares it with the US debate. It considers the role of current demographic changes and the overall fiscal policy situation in shaping the reform agenda and evaluates the different objectives that are debated (short and long term budgetary effects, reduction of distortions, horizontal equity). The important role played by economic forecasting and the related views about the future sustainability of the existing pension systems are also considered. Secondly, the paper examines the main reforms introduced in EU countries in recent years and those currently under discussion in order to trace common features, but also to highlight country specificities. These developments are compared with the reforms considered for the US social security system. The paper notes that in recent years the most radical changes have been considered and implemented in continental European countries. It finds that pension reforms in these countries have been characterised by three main lines of action: parametric changes in traditional PAYG public schemes, the introduction of new pension formulas (such as notional funding) in PAYG schemes, and the development of funded schemes. Similar issues have been raised in the US context but their implications have been less radical. Finally, the paper evaluates the results achieved so far and the need for further reforms.

Chapter 9: Public policy and the transition of private pension provision in the United States and Europe
Elsa Fornero and Onorato Castellino ( Center for Research on Pensions and Welfare Policies, University of Turin, Italy)

Abstract:

In most European countries and in the United States, retirement income derives from three sources: public pensions, private pensions (pension funds and insurance policies), private savings. Of late, public pensions (typically, if not necessarily, based on PAYG) have been the subject of a lively debate, and often of more or less radical reforms, which are dealt with by a separate paper in this volume. Both the debate and the reforms are relevant also for the private (and usually funded) pillar. This paper begins by briefly reviewing the reasons recently put forward on either side of the Atlantic in favour of funding as compared with PAYG, both in a steady state and, more importantly, in a transition perspective. Private pensions in Europe and the USA around the year 1990 are then compared, and the following trends – often in the direction of an increasing importance of occupational and personal pensions - are examined. Two questions are addressed: how deep these trends are and whether they are due to the necessity of correcting the imbalances of PAYG systems and/or in compliance with the principle of “risk diversification” underlying the philosophy of the mixed system. A related but not completely overlapping topic is the choice between defined benefits and defined contributions. There seems to be a tendency – both in the public and in the private sphere – to reduce the degree of risk coverage implicit in the former criterion and to transfer more of it onto the workers. The reasons and the likely effects of this tendency will also be examined.

Chapter 10: Structural change and policy choices in U.S. and European labour markets
Ronald S. Warren( University of Georgia, USA), Sergio Destefanis( University of Salerno, Italy), and Raquel Fonseca ( RAND Corporation, Santa Monica, LA, USA)

Abstract:

This paper examines differences in the performance of European and U.S. labour markets over the past three decades, and offers an assessment of their implications for future policies in the face of current structural economic changes and challenges. In the aftermath of the economic stagnation of the 1970’s, many sectors of the U.S. economy, and especially the labour market, were subjected to greater competition through deregulation, welfare reform, increased immigration, and expanded international trade. In addition, there was a political consensus to increase work incentives, which had the unintended consequence of increasing the inequality of earned income and the number of working poor. In light of the perceived success of these institutional changes in the U.S., it has been forcefully argued that Europe suffers relatively high levels of unemployment because of strong unions, restrictive hiring and firing legislation, and excessively generous unemployment benefits. Recent institutional changes in Europe addressing these rigidities have favoured “non-traditional” (part-time, temporary, and fixed-term) employment, and triggered fears of exacerbating income disparities among working households. We assess the appropriateness of policy choices in the U.S. and Europe and compare their relative success by focusing on four points: 1) the effects of policy reforms, skill-biased technological change, and increased international competition on the growth in the working poor; 2) the importance of interactions among labour market and welfare reforms; 3) the roles of industrial structures, financial markets, and housing sectors in shaping labour market performance; and 4) the causes and effects of the rise in non-traditional employment, with particular attention paid to the trade-off between female employment and the number of children per household.

Chapter 11: Welfare state reform and work-family reconciliation policies in Europe and America
Peter Whiteford (OECD, Paris, France), Janet Gornick ( City University of New York, USA) and Willem Adema (OECD, Paris, France)

Abstract:

In the first section of this chapter, we will document several problems faced by contemporary working families and the societies in which they live. We identify a range of current concerns about family economic well-being, childbearing, caregiving, and gender equality, including: 1) income insecurity; 2) social and institutional barriers to women’s employment; 3) low fertility; 4) inadequate options for non-parental child care; 5) social, economic, and institutional barriers to fathers’ caregiving at home; and 6) insufficient parental caregiving time. In the second section, we apply a number of indicators to assess policy variation between the US and European countries, vis-a-vis key policies that have the potential to ameliorate these problems. These include: 1) family leave rights and benefits; 2) public child care policies; 3) tax/benefit policies aimed at ensuring economic adequacy for families, influencing employment and care patterns and/or creating employment incentives for second earners or for lone parents; 4) working time regulations; 5) anti-discrimination measures targeted on parents and prospective parents, and 6) active labour market policies targeted on mothers. Throughout, we will highlight recent patterns of change, noting both economic and demographic shifts as well as policy reform and restructuring.

Chapter 12: Social federalism and the governance of welfare and in-work benefits in the American states
Robert P. Stoker and Neal E. Toomey ( George Washington University, USA)

Abstract:

The relationship between work and welfare has been transformed by recent changes in the American welfare system. Our paper examines this transformation and its links with changes in social federalism and the allocation of functions between levels of government in the provision of social security and welfare. This transformation cannot be understood unless one appreciates that clients are treated differently depending on whether or not they are workers and where they live. The paper provides first a temporal analysis to demonstrate how different aspects of the safety net have changed over time. The evolution of the safety net has been a combination of devolution and centralization that has made some programs more generous (in terms of the benefits provided and the standards that govern access to benefits) while others have become more miserly. Second, an analysis of the spatial variation in benefit governance and provision is carried out. To a large extent, the social benefits one can receive depend upon where one lives. We compare the estimated value of state-level means-tested social benefits for low-income workers and welfare clients in 1990 and 2000 to describe how the system has been transformed and to explain in more detail the key role that states play in the American welfare system. In the conclusion the comprehensiveness of the new American welfare system will be briefly compared with the different European systems and the lessons of the American case for integration and coordination of social welfare policies within the European Union will be examined.

Chapter 13: Economic integration and the reform of social assistance and activation provisions in European Union countries
Bea Cantillon ( University of Antwerp, Belgium)

Abstract :

A central theme in European social policy reform debates during the past decade has been the extent to which trends in economic integration and the creation of the single market in 1992 has induced pressures on member states to converge the established country-specific social assistance programmes and indeed to engage in a ‘race to the bottom’ in levels of provision. A further theme has been the concern of reducing levels of benefit dependency by guiding more people on to the labour market by the means of various activation measures. This paper examines both issues on the basis of a new data set on changes between 1992 and 2000 of net disposable incomes for a comparable set of hypothetical beneficiaries of social assistance in the fifteen countries of the European Union (pre-May 2004). We assess developments in levels of social assistance against established poverty thresholds, illuminate trends in the different countries in the adequacy of minimum income protection provision, and bring into light possible dependency traps. It is argued firstly that there is no evidence of European governments currently engaging in a ‘race to the bottom’ and also no indication of a ‘convergence’ of social assistance levels. Secondly, there is no clear relationship between trends in benefit levels and the degree of dependency traps or a correlation between the initiation of ‘activation policies’ and the development in the generosity and adequacy of the safety-net. In a concluding section the potential role of European Union level reform initiatives in the field of social assistance is considered in light of the empirical findings of the paper and the p ersistence of national diversities in provisions.

CONCLUSION

Chapter 14: Welfare state reform and the new welfare society in the European Union and the United States
Christian Toft (University of Kassel, Germany)

Abstract:

Great This concluding chapter integrates the issues raised and the analyses provided by the volume. It offers an assessment of the overall transformation of the welfare states in the United States and the European Union, analyses the logic of the new mixed economy of welfare that has been developing as the result of changes in the allocation of functions between the market, the family and the state as well as between the different tiers of government, and it reviews the implications of welfare state reform for income inequality, poverty and other welfare indicators .