The WeLaR workshop “Welfare States and Public Finance: Adapting Welfare States to New Challenges While Ensuring their Long-Run Financial Sustainability” provided an excellent opportunity for scholars from across Europe to share and discuss their recent research on trends in this area.
The event was organised by ZEW – Leibniz Centre for European Economic Research and was held on 24 October in Mannheim. It featured six presentations and brought together 12 participants.
The first session of the workshop focused on public finance. Nizamul Islam (LISER) presented her paper “Automation and Basic Income: Distributional Implications”, co-authored with Marko Vladisavljević and Jelena Žarković (both from the University of Belgrade). Nizamul demonstrated how researchers used the EUROMOD model and EU-SILC data to explore the impact of automation on income distribution and welfare in Europe. Their findings show that while robust welfare systems can mitigate automation-driven inequality, the effects of Universal Basic Income (UBI) vary by country and labour market structure.
Agathe Simon (ESRI Dublin) demonstrated the findings of her paper “The Impact of a European Unemployment Benefit Scheme on Labour Supply and Income Distribution”, co-authored with Mathieu Lefebvre (University of Strasbourg). Using the EUROMOD microsimulation model, they assessed the potential impact of a Eurozone-wide unemployment insurance (UI) scheme on labour supply and income distribution. The simulations show that a flat-rate system would reduce poverty but at the same time create strong work disincentives. A contribution-based system would minimise labour market distortions, but have limited effects on poverty. Meanwhile, a hybrid scheme, with common replacement rates coupled with floor and ceiling amounts, would offer a balance between reducing poverty and inequality while limiting adverse labour supply effects.
Tim Kalmey (ZEW Mannheim) presented the paper “From Local to Global: The Welfare Effects of Fossil Fuel Subsidies and Externalities”, co-authored with Sebastian Rausch (ZEW Mannheim and University of Heidelberg). Researchers studied how welfare, fiscal revenues and CO2 emissions would be impacted by implementing local energy pricing reforms involving the removal of fossil fuel subsidies and pricing of fuel-related local externalities (e.g. health costs from local air pollution; accidents; traffic congestion; and road damage). Kalmey argued that countries could, on average, increase their welfare by 6.5% and fiscal revenues by 4.7% ($213 billion) by implementing this policy. Global implementation would reduce CO2 emissions by 31%.
The second session focused on labour markets. Katarzyna Lipowska (IBS Warsaw) presented “Health, Skills, and Weak Labour Market Attachment in Europe”, co-authored with Marta Palczyńska (IBS). They found that for workers without health limitations, the probability of inactivity remains roughly the same for different levels of social skills use, dropping only with a higher use of digital skills. By contrast, digital and social skills use is crucial for people with health limitations to stay active in the labour market, and the effect of digital skills is even greater than for the population without health limitations.
Holger Stichnoth (ZEW Mannheim and University of Strasbourg) presented “The Net Fiscal Contribution of Foreigners in Germany”, co-authored with Alexandre Gnaedinger (ZEW and University of Mannheim) and Mats Le Floch (Ecole polytechnique). In their paper, the researchers examined the net fiscal contribution of foreigners in Germany using SOEP data, finding that contributions vary by nationality and are influenced by factors such as age and education.
The final session of the workshop focused on social innovation. Ursula Holtgrewe (ZSI Vienna) compared case studies on “Social innovations and the welfare state” from six European countries, conducted by Project WeLaR. The comparison shows that social innovations’ missions range from extension of social services to transformational aspirations, but converge on certain pragmatic practices that go beyond simple distinctions of more or less transformational innovations. Such practices consist in needs-based services that cross policy domains; support to target groups that are affected by the downsides of some social policies; and the building of “ecosystems” in which actors collaborate and learn but also compete. At any rate, to make impacts and realise synergies, they need institutional counterparts on multiple policy levels.
