What role for ‘in-work benefits’? A comparison of policies in EU Member States, 2006 – 2017

Abstract

Since the turn of the century, tax and cash benefit policies for households undertaking paid work, referred to as ‘in-work benefits’ in this thesis, have become common among democratic capitalist countries, including European countries. These policies are often associated with the goals of alleviating in-work poverty and reducing unemployment as they ‘make work pay’ by topping up inadequate earnings for some working households. The rise of in-work benefits therefore signifies at least a partial break with the ideal that participation in paid work guarantees financial independence from the state, which has been historically embedded in varied institutional configurations across capitalist countries. Yet, gaps in comparative research on trends and variation in in-work benefits make it hard to assess the significance of this shift. Claims about in-work benefits as being driven by socio-economic pressures (e.g. labour market risks in deindustrialised societies), political compromise and ambiguity, and the (neo)liberalisation of political economy, may not apply across contexts, especially given the variation in in-work policies identified in some studies.

Addressing these gaps, this thesis develops a conceptual framework, which draws on comparative political economy and social policy perspectives to interpret cross-national and temporal variation in in-work benefits, considering the socio-political dimensions of policies under examined in comparative research. Specifically, it compares the orientation of countries’ in-work policies to forms and degrees of dependence on the state, labour market and the family. Using data on countries’ tax-benefit systems, and estimating countries’ expenditure on in-work benefits using a tax-benefit simulator, this framework is applied to a systematic comparison of in-work benefits in European Union member states (EUMS), covering the period 2006 and 2017. It includes a mapping of two ‘archetypal’ in-work benefits and two forms of ‘possible’ in-work benefits; analysis of policy expenditure from 2006 to 2017; and a comparison of policy rules and design features, operationalising the ‘dependency relationships’ framework. In line with the systemic frameworks underpinning the research, the findings are contextualised with indicators of historical and contemporary context, including social policy legacies and socio-economic pressures, across EUMS.

This thesis provides further evidence that tax and benefit policies that bring the state more firmly into the domain of income maintenance for working people are common across EUMS. Such policies were implemented and/or expanded more recently in Nordic, Central and Eastern and Southern European countries. Yet, both the variation identified in EUMS’ in-work policies in this research, which are summarised into five ideal-typical models, and the different ways in-work benefits appear to relate to institutional and socioeconomic context, indicate that the ideals and interests underpinning in-work policies cannot be understood in homogenous terms. The findings also cast doubt on the notion that in-work benefits will become increasingly prevalent in the future. The thesis leads to several recommendations for future research, including analysis of specific cases, selected from the five models identified, to further examine the interaction of historical institutions, socioeconomic factors and political dynamics on in-work benefit policymaking.