Welfare capitalism: The ten year impact of governments on poverty, inequality and financial risk in West Germany, the Netherlands and the USA

This paper assesses the ten year (1987-96) impact of taxes and transfers on poverty, income inequality and financial insecurity in the working age populations of the Netherlands, the USA and West Germany. These are the only countries for which ten consecutive years of socio-economic panel survey data are available, so they afford a unique opportunity to assess the medium to long term performance of governments in achieving key equity goals. It is indeed fortunate that Germany, the Netherlands and the USA are the three countries for which long running panels exist, because they can be taken as ‘best cases’ of Gosta Esping-Andersen’s ‘Three worlds of welfare capitalism’ (1990). In Esping-Andersen’s terms the USA is the prototypical liberal capitalist system and Germany is the clearest case of a conservative, corporatist welfare - capitalist state. The Netherlands from the mid-1980s onwards is classified by Esping-Andersen as a social democratic welfare-capitalist state, although it is clearly a borderline judgment, since the Netherlands has progressive social benefits but does not have the other defining characteristic of social democracy (according to Esping-Andersen’s slightly Swedocentric view) of commitment to active labor market programs.