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Welfare State Entry and Exit Over the Life Course: Employment and the Sustainability of the Welfare State in Different Worlds of Welfare

Julkaistu 1.1.2020


The concept of “sustainability deficit”, or fiscal gap as it is sometimes called, pertains to the ability of a welfare state to maintain its current social policy programmes, spending levels, tax and other policies for decades to come. If we look at the sustainability deficit from a life cycle perspective, the role of employment becomes essential for combatting the deficit. High employment rates have been a cornerstone of the renowned Scandinavian welfare state model.

A few tentative conclusions follow from our explorations. The first one is about the shift in the discursive focus. Economic and demographic challenges for the welfare state have taken the floor, and consequently, the Esping-Andersenian “decommodification” has given way to
“recommodification”, or how to put people (back) into employment. Countries are looking for means to increase employment among the young, to give better possibilities for mothers to work and to create incentives for the ageing to continue to work. 

Secondly, the notion of “three worlds” of welfare capitalism is less valid today than a quarter century ago. This has to do with two different processes. First, employment participation rates of elderly (60 to 64 years of age) workers in OECD countries have changed due mainly to the modernisation of family policy and activation in labour market policy. Second, the old world of the 18 OECD countries is changing by extension of the OECD and of the EU.

The life cycle deficit inspection still reveals some welfare regimespecific peculiarities. As a rule, in Central Europe the youngsters enter the labour markets earlier than, for example, in the Nordic cluster, but in contrast, the older workers have an earlier exit from employment than do, for example, the Swedes. The specific problem for many postSocialist countries is the late entry and early exit from the labour markets. Some East-Asian countries suffer from the same problem. In the Nordic countries, the sunny side of heavy investments in publicly provided social services is high female employment rates, which, in turn, effectively combats the sustainability deficit of the welfare state. 

The level of employment is essential for the solvency of the welfare state. In fact, high employment rates have been a cornerstone of the renowned Scandinavian welfare state model. However, as can be seen in the graphs, employment problems in the Nordic countries are associated with the young. The issue in Central and Southern Europe is the (too) early exit from the labour markets. In addition, a low female labour force participation diminishes the value of production in these countries, which is a challenge for East Asia too. We have illustrated how countries differ when it comes to critical phases in the economic lifecycle. The fact that countries differ not only suggests that institutions matter but also that there is room for policy learning. A broader understanding of how welfare, education and labour market policies work to produce different kinds of labour market participation patterns for youngsters, parents and elderly people is an important lesson, and we should make good use of that lesson if we want to benefit from best practices in research. In the end, the lesson is about designing policies that can foster high levels of employment in all relevant phases of the lifecycle to ensure equality in society as well as sustainability of the welfare state simultaneously.

Lue koko julkaisu (


Olli Kangas, Joakim Palme, Markus Kainu

Lisätietoja julkaisusta

  • Vertaisarvioitu: kyllä.
  • Avoin saatavuus: kyllä.
  • Koko viite: Kangas, O., Palme, J., & Kainu, M. (2020). Welfare state entry and exit over the life course: Employment and the sustainability of the welfare state in different worlds of welfare. Teoksessa A. Riekhoff, T. Anttila, & N. Foulkes Savinetti. Shaping and re-shaping the boundaries of working life. Tampere University Press.

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