Wage supplements in mature welfare states: accounting for in-work benefit reforms in France and the United Kingdom, 1995-2020

Abstract

In-work benefits (IWBs) are policies through which the state directly supplements market wages through cash or tax transfers. Such policies are often targeted at low wage earners and are associated with the goals of increasing financial work incentives and reducing in-work poverty. Over the past three decades IWBs have become an increasingly common component of the tax-benefit systems of mature welfare states.

This thesis compares the development of IWBs in France and the United Kingdom from the mid-1990s to 2020. Until the mid-1990s governments in these countries pursued different strategies towards low earners, with France relying on a minimum wage and extension of collective bargaining agreements, and the UK relying on IWBs in the absence of a minimum wage. However, as this thesis shows, since the mid-1990s qualified convergence has taken place in how each country supports and regulates low-wage work, with both making use of IWBs as well as minimum wages. Focusing on IWBs in particular, while certain differences in the design and logics of British and French IWBs remain, reform trajectories have shared an overall path of convergence.

These national trajectories appear puzzling in light of most current theories of post-industrial welfare state change. To address this puzzle, the thesis employs a multi-streams analytical framework to identify causal factors motivating each IWB reform in France and the UK since the mid-1990s. The study demonstrates that while qualified IWB convergence was the result of complex causal processes, the ideational frameworks of policymaking elites played a leading role. Further, political incentives for the state to intervene to support low-waged workers, and increased reliance on means-tested social assistance, were important common factors explaining the respective reform paths. Overall, the study offers new insights into how ideas shape policy in contexts of causal complexity and historical contingency. More broadly, the thesis throws further light on the processes shaping welfare state transformations in the post-industrial and digital eras.