The COVID-crisis as an opportunity for welfare recalibration? Panel-data evidence on the effect of the COVID-crisis on welfare preferences in Spain, Germany, and Sweden

Abstract

The reform capacity of welfare states to adapt to the needs of post-industrial labour markets has been a key question of the welfare literature for the last two decades. In a context of austerity, such adaptations (retrenchment or recalibration) are notoriously difficult because of extremely high levels of support for existing policies, particularly old age pensions. We investigate how the recent economic shock caused by the COVID-pandemic has changed social policy preferences in three West European countries (Germany, Sweden, Spain). Relying on original panel data observing the relative support for social policies before and during the crisis, we show that support for old age pensions has dropped substantially relative to other social policies. This drop can be observed in all three countries and among all ideological and age groups. The drop is strongest among current and soon-to-be pensioners who in turn increased support for benefits to the working-age population. At the expense of pensions, the economic shock has especially boosted support for active labour market policies and (in Germany) childcare services. This shift of support from pensions to social investment policies might have opened up a window of opportunity for recalibrating welfare reforms.