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SOCIAL FOUNDATIONS OF POSTINDUSTRIAL ECONOMIES This page intentionally left blank Social Foundations of Postindustrial Economies G0STA ESPING-ANDERSEN OXPORD UNIVERSITY PRESS This book has been printed digitally and produced in a standard specification in order to ensure its continuing availability OXPORD UNIVERSITY PRESS Great Clarendon Street, Oxford 0X2 6DP Oxford University Press is a department of the University of Oxford. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Bangkok Buenos Aires Cape Town Chennai Dar es Salaam Delhi Hong Kong Istanbul Karachi Kolkata Kuala Lumpur Madrid Melbourne Mexico City Mumbai Nairobi Sao Paulo Shanghai Taipei Tokyo Toronto Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © G. Esping-Andersen 1999 The moral rights of the author have been asserted Database right Oxford University Press (maker) Reprinted 2003 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose this same condition on any acquirer ISBN 0-19-874201-0 ACKNOWLEDGEMENTS The material in this book has been repeatedly tested on a non-random cross-section of student populations: at the European University Institute, the University of Trento, the Juan March Foundation in Madrid, New York University, the University of Wisconsin-Madison, the Faculty of International Economics at Maastricht, and at the University of Pompeu Fabra. Chris de Neubourg, Wolf Heydebrand, and Vicente Navarro deserve thanks because their invitations to lecture on the welfare state at Maastricht, the New York University, and Pompeu Fabra respectively, helped me test the coherence of the argumentation that follows. Students are excellent cannon-fodder on the global academic battle- field. I do have some sympathy with my students at Trento when they lament that my lectures are incomprehensible. They are, of course, the front-line recipients of any new idea that comes to mind. To my students, therefore, a genuine, if collective, appreciation. Many of the papers and talks that eventually coagulated into this monograph were written in response to criticism of my earlier work, a heavy dose of which came from the feminists. What I caught from their attacks was not so much the overarching salience of gender as the analyt- ical power that a re-examination of the family can yield. A thank you, therefore, to one more collectivity: the feminist critics. You often need a nudge from someone to bring that endless mass of papers you have been writing into a coherent book. For this I must thank Colin Crouch, who generously proposed that I put together an updated, re-thought, and revised study on comparative welfare states and publish it in his series at Oxford University Press. I must also apologize for the fact that what you see here is a far cry from what we initially agreed upon. I did indeed have an endless mass of papers to go on, but I soon dis- covered that they did not add up to much. No wonder, many of them were the kind of stuff that airport-academics concoct between check-in and arrival on the nth seminar journey: the same argument or the same data recycled over and over again. Those that have found their way into this book in one shape or another were the ones that took real effort. Two such were my study for the United Nations (UNRISD) 1995 Social Summit in Copenhagen, and the study for the OECD Conference on Towards 2000 in Paris, 1996. Here is my chance to acknowledge my debt to Dahram Gai, Cynthia Hewitt (both at UNRISD), and Peter Sherer (at the OECD) for the opportunity to make myself clear also to a non-academic audience. vi Acknowledgements I cannot honestly claim that everything that the reader will find in this book are the fruits of my own hard labour. There are two groups whose generosity has been decisive. One helped me with data and statistical analysis. Ivano Bison at Trento, Koen Vleminckx at LIS, and Axel West Pedersen at FAFO in Oslo have been outstandingly generous. The second group helped me think more clearly on various questions. Jens Bonke and Anne-Mette Sorensen helped me think about the household economy; Gotz Rohwer, Hans Peter Blossfeld, and Karl Ulrich Mayer helped me think about the life course. Carles Boix, Colin Crouch, Ian Gough, Axel Leijonhuvud, Frances Piven, Adam Przeworski, Jill Quadragno, and Vicente Navarro all helped me with thoughtful suggestions across the entire spectrum. John Myles, as always, helped me think about what, in the first place, I was doing, and why. But there is only one person in the world to whom I really wish to ded- icate this book, namely Paula Adam. G0sta Esping-Andersen Barcelona June 1998 CONTENTS List of Tables viii 1: Introduction 1 PART I: VARIETIES OF WELFARE CAPITALISM 13 2: The Democratic Class Straggle Revisited 15 3: Social Risks and Welfare States 32 4: The Household Economy 47 5: Comparative Welfare Regimes Re-examined 73 PART II: THE NEW POLITICAL ECONOMY 95 6: The Structural Bases of Postindustrial Employment 99 7: Managing Divergent Employment Dilemmas 120 PART III: WELFARE CAPITALISM RECAST? 143 8: New Social Risks in Old Welfare States 145 9: Recasting Welfare Regimes for a Postindustrial Era 170 Bibliography 185 Index 201 LIST OF TABLES 1.1 Major symptoms in the perennial welfare state crisis 2 2.1 A comparison of labour market institutions 20 2.2 Labour market regulations and worker job rights 22 2.3 The waves of (a) de-ruralization, and (b) de-industrialization 26 4.1 The impact of unpaid work and of daycare on women's 60 employment 4.2 Comparative welfare state de-familialization 61 4.3 The intensity of family welfare provision 63 4.4 The net post-transfer/tax cost of child care for a family 66 with average income 4.5 Women's employment levels and fertility 68 4A Welfare state services to families 71 4B Welfare state incentives and disincentives for working mothers 72 5.1 Logistic odds-ratios for social assistance and private pension 77 dominance by welfare regime 5.2 Logistic regressions (odds-ratios) of universalism and private 81 pensions, and welfare regime types 5.3 Logistic regressions (odds-ratios) of welfare regimes and 84 corporatism, etatism, and welfare state de-familialization 5.4 A summary overview of regime characteristics 85 5.5 Multinomial logit regressions. The relative odds of high levels 93 of welfare state family support and of low levels of family- caring burdens by welfare regime and women's employment levels 6.1 Employment and unemployment performance in the 100 advanced economies 6.2 Industrial and postindustrial occupation hierarchies 107 6.3 Service growth and the professional-technical bias of job 108 growth, 1980-1990 6.4 The distribution of occupations and the size of the outsider 109 population 6.5 The growing productivity gap. Percentage change in the ratio 112 of service-to-manufacturing productivity, 1983-1995, for select countries 6.6 The cost-disease illustrated by laundry servicing. The 113 comparative cost of washing and ironing one man's shirt, employment, and self-service equipment, mid-1990s List of Tables ix 6.7 Difference in expenditures on restaurants, hotels, and 116 personal services by household type 6.8 Time constraints and personal-service jobs. The impact of 118 married women's employment on job growth in services. Cochrane-Orcutt time-series estimates 7.1 Low wages, and the relative risk of unemployment among 127 the less-skilled, youth, and women, 1990s 7.2 Explaining early retirement 132 7.3 The equality-jobs trade-off 133 7.4 Labour market protection, actual job growth, and 134 regression-estimated hypothetical deviation from actual job growth during the 1980s 7.5 Rigidities, bargaining structure, and employment outcomes 136 7.6 Rigidities, bargaining structure, and the unemployment bias 137 7.7 Rigidities, bargaining structure, and probabilities of 139 leaving unemployment 7.8 Regimes and employment performance 139 8.1 'Static'headcount indices of exclusion and inequality, 156 early mid-1990s 8.2 Trends in employment and poverty 157 8.3 Transitions and entrapment 158 8.4 Poverty rates in traditional and new child family types 162 8.5 The impact of social transfers and employment on 165 single-mother poverty 8.6 Welfare state adaptation: trends in servicing and 166 age bias, 1980-1992 8 A Servicing and age bias of welfare states 169 9.1 Public and private social-protection spending, 1990 177 This page intentionally left blank 1 Introduction We social scientists have some difficulty keeping pace with history. Most of us were bred on the notion that this has been the century of victorious pluralism, social citizenship, and welfare capitalism. Yet, we now look back with heavy nostalgia on the decades of Golden Age Capitalism when all seemed to work better. Today it seems that one after another of those constituent elements that once assured harmony and happiness are sliding into irreversible crisis and decay. Europe will herald in the new century with 15-odd million unemployed; North America, with about the same number of low-wage workers.