The welfare state and social capital in Europe: Reassessing a complex relationship

Abstract

The article investigates the relationship between the welfare state and social capital in Europe during the 1990s and the 2000s using structural equation modelling (SEM). By formulating and testing the hypothesis that welfare state generosity and welfare state size have different effects on social capital, we reassess the explanatory power of the main theories in the field and the findings of previous empirical work. We strongly support the contention of institutional theory that there is a positive association between high degrees of welfare state generosity and social capital. Moreover, we partially confirm the concern of neoclassical and communitarian theories for the negative correlation between large-size welfare states and social capital. The positive relationship between welfare state generosity and social capital is much stronger than the negative association observed with welfare state size. Finally, we interpret the considerable cross-country variation using welfare regime theory and several country cases. We illuminate different mechanisms linking welfare state development and social capital creation, discussing the Danish and Dutch third sector experiences and pointing to Sweden as an exceptional case of decline. Furthermore, we highlight the importance of regional variation in Belgium, Germany and Italy and complement the analysis also briefly discussing the Austrian, French, Irish and British cases.