Working paper The role of social investment in the life course: possible reduction in vulnerability and gender gaps

EuSocialCit researchers from the Warsaw School of Economics – Agnieszka Chłoń-Domińczak, Irena E. Kotowska, Iga Magda, Magdalena Smyk-Szymańska, Paweł Strzelecki and Karolina Bolesta – published a working paper entitled The role of social investment in the life course: possible reduction in vulnerability and gender gaps.

The paper contributes to the ongoing debate on social investment returns and their measurement. Following the conceptual framework developed by Vandenbroucke et al. (2021), we attempt to find out whether different social investment strategies produce different outcomes. Our focus is on the role of social investments in reducing vulnerabilities over the life course, considering the observed outcomes in the areas of education, employment, labour income as well as public consumption and net public transfers. Thus, we refer mainly to social investment outcomes related to strengthening human capital and facilitating labour market transitions. Moreover, we also consider gender aspects, as they matter for life opportunities and risks.

The study is carried out at the national level and makes use of the country clusters as distinguished by Baiocco et al. (2021). Two main research questions guide the investigation:

(1) Do different social investment strategies relate to different outcomes defined in terms of generational economy?

(2) How do different social investment strategies and access to formal and informal childcare relate to the gender gaps in the labour markets?

To answer the first question, the National Transfer Accounts (NTA) data is used. The NTA data allows to reveal how welfare state policies shape the life course of women and men in terms of generational economy variables. To answer the second question, a country-level dataset was created to analyse labour market inequalities by gender. Special attention was paid to the domains of vulnerabilities that can be prevented by social investment: unemployment, poverty, and health at old age and limited access to early childhood education and care services.

Findings of the NTA approach show that the three types of social investment strategies considered are associated with different outcomes by gender, depicted in differently structured life trajectories. In countries with developed social investment policies (all-in strategy), both women and men show higher labour market attachment, higher lifetime earnings and longer working careers. The gender gap is the smallest in total consumption, as well as public education consumption. In the other two groups of countries (characterized by stripped-down strategy and sprouting-up), where social investment policies are less developed, the age profiles of wages indicate more vulnerability on the labour market, particularly in old age, and a lower lifetime income. More reliance on welfare policies is noticed there. Gender gaps in public education consumption are also larger. In the countries with the sprouting-up strategy (mainly the new Member States) the relative public education consumption is smaller, compared to the other two groups of countries. Gender gaps in relation to labour income are smaller in the third group, but mainly due to earlier labour market withdrawal of men from employment.

Regarding the second research question, the role of social investment strategies in reducing the labour market gender gaps was confirmed. In particular, the better provision and use of the early childcare and education do not only contribute to early investment in human capital, but also to lowering gender gaps in the labour market. However, various childcare indicators show different effects for the employment and pay gender gaps, revealing that the associations between selected indicators of this type of social investment and gender gaps in the labour market are not always straightforward. To explore them, more insights are needed in the labour market structures and economic activity patterns over the life course on one hand, and formal and informal childcare arrangements on the second hand. As informal care arrangements reflect also social perception about obligations for childcare, the cultural context needs to be accounted for also.

The study provides a description of the current and historical relationships between gender gaps on the labour market and different social investment strategies, but they do not offer causal explanations.