Excessive social imbalances and the case for a European Social Union. Frank Vandenbroucke

Transcription

1 Excessive scial imbalances and the case fr a Eurpean Scial Unin Frank Vandenbrucke

2 Resurces Vandenbrucke, Diris, Verbist, Excessive Scial Imbalances and the Perfrmance f Welfare States in the EU, Eurfrum Plicy Paper, April 2013 ( Vandenbrucke, with Vanherce, A Eurpean Scial Unin: 10 Tugh Nuts t Crack, Friends f Eurpe, February 2014 ( Eurpe/03_03_14_Reprt_ScialUnin_FINAL_V.pdf)

3 Debates n scial Eurpe Scial Eurpe is an elusive cncept Denial f existing acquis A Eurpean Welfare State, r a Unin f Welfare States?

4 A Eurpean Scial Unin

5 A Eurpean Scial Unin A Scial Unin wuld supprt natinal welfare states n a systemic level in sme f their key functins guide the substantive develpment f natinal welfare states via general scial standards and bjectives, leaving ways and means f scial plicy t Member States n the basis f an peratinal definitin f the Eurpean scial mdel. Eurpean cuntries wuld cperate in a unin with an explicit scial purpse

6 Defining the EMU s scial bjective is a necessity rather than a luxury A basic cnsensus n scial bjectives is an existential necessity fr the lng-term sustainability f EMU Lng term Shrt term: hw t restre stabilisatin capacity? Shared bjectives Preventin/crrectin f excessive scial imbalances Scial investment

7 At-risk-f-pverty rate Child pverty: an excessive scial imbalance 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0,0 DK SI FI NL SE CZ CY AT DE FR SK EE BE IE MT HU LU PL LT PT GR LV UK IT BG ES RO Child pverty 2007 (SILC 2008) Child pverty 2011, threshld 2007 (SILC 2008, 2012)

8 Ecnmic grwth vs. inequality Anchred pverty measures are affected by Redistributin Ecnmic grwth Impact ecnmic grwth dminates Especially true during crisis years Negative grwth hurts mre than psitive grwth helps Diverging (anchred) pverty rates are predminantly explained by the magnitude f the ecnmic crisis in cuntries with high initial child pverty (cincidence?)

9 Excessive scial imbalances Divergence threatens plitical legitimacy f EU High levels f child pverty signal investment deficits that may be cause and effect f underperfrming welfare systems, i.e. underperfrming Transfer systems Labur markets Child care & educatin

10 Mapping child pverty (flating threshlds) Data and mdel Explanatry variables: Scial spending n cash transfers and pensins Husehld wrk intensity (tw measures) Pr-prness f transfer and pensin benefits Scial investment and human capital Demgraphic dependency Data frm EU SILC GLS mdel, using panel data We include: Cuntry fixed effects Time fixed effects

11 Transfers & pensins as % f dpi, age [0-17], SILC 2008 versus ESSPROS wrking-age cash benefits % GDP, % 30% 25% 20% 15% 10% 5% 0% Transfers SILC 2008 Pensins SILC 2008 Wrking Age Cash Benefits ESSPROS 2007

12 Pr-prness f spending We cntrl fr the size f spending, but als fr hw benefits are targeted ex pst ( ex ante; means testing) We apply a measure f pr-prness, similar t Krpi and Palme (1998): calculates hw incme cmpnents are distributed, irrespective f their size Where K-P find that this is negatively related t the size f spending (mid 1980s), ur findings are different Psitive crrelatin between pr-prness f transfers and size f transfers N crrelatin between pr-prness f pensins and size f pensins

13 Husehld wrk intensity Fcus n tw ppulatin subgrups: Wrk pverty = share f individuals in husehlds with wrk intensity lwer than 55% Severe wrk pverty = share f individuals in husehlds with wrk intensity lwer than 20% We apply tw cntrls fr wrk intensity f the husehld (best fit): Wrk pverty Relative severity f wrk pverty = severe wrk pverty / wrk pverty Wrk pverty crrelates with scial investment Relative severity f wrk pverty crrelates with plarizatin

14 Results (1) Bth transfers and pensins are negatively related t pverty, with rughly similar impacts Statistically significant effects f wrk intensity Hwever, they explain nly very little f the disparity in pverty rates acrss Eurpe in this FE mdel Magnitudes f effects is mdest N cuntry perfrms universally bad r gd n all these indicatrs N additinal explanatry pwer f human capital, scial investment, GDP r dependency in cuntry FE mdel

15 Residuals Results: efficiency screbard Nrth New Central Old Central UK+IE Suth East Benchmark A Benchmark B Benchmark C Benchmark D DK FI IS NL NO SE CZ SI SK AU BE DE FR UK IE ES GR IT PT BG ET LI LT PL RO

16 Results (2) Unexplained disparity reflects differences in the underlying scial fabric, which crrelate with Level and architecture f scial spending Transfer spending Pensin spending: Psitive structural crrelatin f child pverty with pensin spending (as feature f underlying scial fabric ) Negative regressin cefficient fr impact f changes in pensin spending that affect husehlds with children Pr-prness GDP per capita Scial investment but are nt readily explained by these factrs separately

17 Excessive scial imbalances: bad equilibria Child pverty as a human capital investment deficit Educatin asymmetry Pensin asymmetry

18 Emplyment rate 15-64, 2012 The human capital asymmetry (1) 85,0 80,0 Few lw-skilled High emplyment rate 75,0 DE SE AT NL DK 70,0 65,0 60,0 55,0 CZ EE SI LV LT SK PL FI UK BG HU LU CY EU28 FR BE RO IE IT ES MT PT 50,0 Few lw-skilled Lw emplyment rate CR GR Many lw-skilled Lw emplyment rate 45,0,0 10,0 20,0 30,0 40,0 50,0 60,0 % f ppulatin (15-64) with lwer secndary educatin attainment, 2012

19 Emplyment rate 25-29, 2012, LFS The human capital asymmetry (2) 90,0 85,0 AT NL 80,0 75,0 LU PT LT LV SE DE FR PL DK CZ SI UK BE EE FI 70,0 RO SK HU IE 65,0 BG CR 60,0 IT ES 55,0 GR 50, Average PISA results

20 Cnclusins: plicy (1, dmestic) Well-rganized scial prtectin and scial investment are cmplementary strategies Increasing fragility f mdels relying n pensin spending (w.r.t. child pverty): pints t scial investment, but als tensins between shrt term and lng term. Argument in favur f cmbinatins f universalism and selectivity ( prgressive universalism ) nt cntradicted by data; analysis shuld g beynd reading the data. Bth emplyment creatin and distributin f jbs ver husehlds matter (rle f activatin and supprting services)

21 Cnclusins: plicy (2, EU level) Excessive scial imbalances must be incrprated in plicy analysis and recmmendatins: ecnmic and scial gvernance cannt be dissciated N ne size fits all EU gvernance, but mre balanced apprach t macr-ecnmic crdinatin greater rm f maneuver and supprt fr member states that pt fr a scial investment strategy plicy guidance based n sufficiently stringent and cnstraining bjectives (scial utcmes) and scpe fr explratin/learning n ways and means t achieve utcmes.

22 Which slidarity in the EU? A dual perspective: pan-eurpean chesin and dmestic chesin Reciprcity A caring Eurpe shuld care fr prer Member States and demand scial efficiency everywhere A virtuus circle f slidarity in Eurpe wuld be ne where bth internal (dmestic) and external (pan-eurpean) slidarity are enhanced

23 The scial investment imperative A scial investment agenda (cf. Eurpe 2020, SIP) Child-centred scial investment strategy Human capital investment push Recnciling wrk and family life Later and flexible retirement Migratin and integratin thrugh educatin and participatin Minimum incme supprt and capacitating service prvisin The plitical deal the EU needs is ne wherein all gvernments pursue budgetary discipline and scial investment, and are supprted therein in a tangible way by the EU.

24 Cnclusin (1): the legacy f the crisis excessive scial imbalances, instead f cnvergence budgetary plicies cntradict Eurpe 2020 (e.g. educatin) reduced stabilizatin capacity reduced scial regulatin capacity

25 Cnclusin (2): the case fr a Eurpean Scial Unin supprt natinal welfare states n a systemic level in key functins (e.g. stabilizatin) guide the substantive develpment f natinal welfare states via general scial standards and bjectives => scial investment, minimum wages and minimum incme prtectin => slidarity in refrm leaving ways and means f scial plicy t Member States a Unin f Welfare States, with an explicit scial purpse

26 Cnclusin (2): the case fr a Eurpean Scial Unin supprt natinal welfare states n a systemic level in key functins (e.g. stabilizatin) guide the substantive develpment f natinal welfare states via general scial standards and bjectives => scial investment, minimum incme prtectin => slidarity in refrm leaving ways and means f scial plicy t Member States a Unin f Welfare States, with an explicit scial purpse

27 Thank yu! Vandenbrucke, Diris, Verbist, Excessive Scial Imbalances and the Perfrmance f Welfare States in the EU, Eurfrum Plicy Paper, April 2013 ( Vandenbrucke, with Vanherce, A Eurpean Scial Unin: 10 Tugh Nuts t Crack, Friends f Eurpe, February 2014 ( Eurpe/03_03_14_Reprt_ScialUnin_FINAL_V.pdf)