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Decent Incomes for AllImproving Policies in Europe$
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Bea Cantillon, Tim Goedemé, and John Hills

Print publication date: 2019

Print ISBN-13: 9780190849696

Published to Oxford Scholarship Online: December 2018

DOI: 10.1093/oso/9780190849696.001.0001

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Social Investment at Crossroads

Social Investment at Crossroads

“The Third Way” or “The Enlightened Path” Forward?

Chapter:
(p.201) 9 Social Investment at Crossroads
Source:
Decent Incomes for All
Author(s):

Axel Cronert

Joakim Palme

Publisher:
Oxford University Press
DOI:10.1093/oso/9780190849696.003.0010

The concept of social investment has gained ground among European Union policymakers as a strategy to reconcile the goals of employment, growth, and social inclusion. However, scholars have criticized the social investment approach for not achieving its intended distributional consequences and have questioned the complementarity between the goals of increasing employment and decreasing poverty. We argue that distinguishing between the “Enlightened Path”—more commonly known as the “Nordic approach”—and the “Third Way” approach to social investment is important for understanding the relationships between social investment policies, employment, and poverty. By critically examining policy developments in Sweden, we find that the recent noticeable increase in relative poverty can best be accounted for by changes in tax and transfer policies that represent a shift from the Nordic approach to the Third Way approach, whereas an “employment vs. poverty” trade-off is mitigated by the sustained presence of a compressed wage structure.

Keywords:   social investment, employment, poverty, Third Way, employment−poverty trade-off, minimum wages, Sweden

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