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European welfare state under the policy "make work pay" : Analysis with composite indicators


  • Tangian, Andranik S.


The social security systems in 22 European countries are evaluated with a specially constructed indicator. It is based on a census-simulating model which combines both empirical (statistical) and normative (rule-based) approaches. The individual answers of unemployed on social security benefits are normatively derived from their personal situations with the OECD Tax-Benefit Models. The empirical data about personal situations are available from EuroStat. The goal is estimating the national average of net replacement rates (NRR) for unemployed persons. Such an indicator of social security shows the average degree with which social benefits compensate the loss of previous earnings. Thus, the paper suggests: -(Methodology) a model of census simulation combining statistical data on the population with individual answers computed with a rule-based model, -(Indicator) an integral quantitative evaluation of social security in Europe, which reveals its total decline by 2004 contrary to institutional improvements, -(Analysis) an explanation of the decline by a structural change of European labour markets with rapidly growing `atypical' employment groups (= part-time, temporary, self-employed, etc.) with a lower eligibility to social benefits than normally employed (= permanently full-time), -(Policy implications) a possible resolution of European policy contradictions by the "basic income model" with "flexinsurance".

Suggested Citation

  • Tangian, Andranik S., 2005. "European welfare state under the policy "make work pay" : Analysis with composite indicators," WSI Working Papers 141, The Institute of Economic and Social Research (WSI), Hans-Böckler-Foundation.
  • Handle: RePEc:zbw:wsidps:141

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    References listed on IDEAS

    1. Herwig Immervoll & Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2007. "Welfare reform in European countries: a microsimulation analysis," Economic Journal, Royal Economic Society, vol. 117(516), pages 1-44, January.
    2. Mau, Steffen, 2001. "Patterns of popular support for the welfare state: a comparison of the United Kingdom and Germany," Discussion Papers, Research Unit: Social Structure and Social Reporting FS III 01-405, Social Science Research Center Berlin (WZB).
    3. Willem Adema & Maxime Ladaique, 2005. "Net Social Expenditure, 2005 Edition: More Comprehensive Measures of Social Support," OECD Social, Employment and Migration Working Papers 29, OECD Publishing.
    4. Herwig Immervoll & Cathal O’Donoghue, 2003. "Employment Transitions in 13 European Countries. Levels, Distributions and Determining Factors of Net Replacement Rates," CESifo Working Paper Series 1091, CESifo Group Munich.
    5. van Oorschot, W.J.H., 1999. "The legitimacy of welfare : A sociological analysis of the motives for contributing to welfare schemes," WORC Paper 99.11.02, Tilburg University, Work and Organization Research Centre.
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    More about this item


    Composite indicators; social security; European welfare state; European Union; make work pay policy;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy


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