Welfare regime, middle class societies and the challenge of education

1. Welfare regime, middle class societies and the challenge of education Louis Chauvel http://louis.chauvel.free.fr Professeur de sociologie Sciences-Po Paris

2. Higher strata Economic Ressources Educational ressources Lower Strata The theory of the “new middle class” expansion and the structuration of an educated wage earner class deeply connected with the welfare statesee SCHMOLLER G. 1897, Was verstehen wir unter dem Mittelstande? Hat er im 19. Jahrhundert zu oder abgenommen?, Göttingen, Vandenhoeck und Ruprecht. Against the Marxist theory of absolute pauperization : => Late Nineteenth century and the expansion of large state and private technical, managerial and expertise bureaucracies – supported and institutionalized by increasing social rights – foster the constitution of a culturally educated and economically comfortable “neu mittelstand” => The state is not simply an equalitarian ruler, a provider of decommodified resources, it could be also a specific employer New higher middle class Old higher middle class New lower middle class Old lower middle class

3. Wage stagnation, rising housing prices, emergence of a new propertied class, decline in the return of education, but also new uncertainties, decline of welfare state protections, “precarity”, lack of control on future at the individual level : fear of the old “new middle class” ; farewell to the wage earner middle class The middle classes adrift 2006 What about the diagnoses, the processes, the real challenges and the suitable responses ?

4. Middle class and the challenge of education • A French debate : stability or overeducation ? • A cohort decline : the French anti-model of social development • A four models comparison : how to share slow down between and within cohorts ? • Conclusion : The comparative evolution of the intermediate educated middle class

5. I. A French debatestability or overeducation : Is educational expansion a systematic progress ? • The Marie Duru-Bellat versus Eric Maurin debate “inflation scolaire” theory : decline in the value of grades versus educational expansion as social and democratic progress • Explanation of the paradox : Nominal decline of the value of educational assets but relative stability of degrees relative value inside a cohort • A French mistake in the management of educational expansion ?

6. II. A cohort decline : the French anti-model of social development • The fate of birth cohorts : how the socioeconomic context of socialization may change the destiny of social generations ? • The social-generational fracture in France (in a context of strong familial-generations solidarity) • The consequences in the value of education :The diverging path of birth cohorts The fate of generations 1998 & 2002

7. QUESTION : IN FRANCEare there long term consequences of collective difficulties when entering labor market ? Risks of unemployment 12 months after living school  (%) 45% 40% 35% 30% 25% Male Female 20% 15% Cohorte 1959 10% 5% Cohorte 1953 0% 1970 1980 1990 2000 Source : Enquêtes emploi INSEE 1969-2002, archives Lasmas

8. QUESTION : IN FRANCEare there long term consequences of collective difficulties when entering labor market ? Private sector wage earner (full time full year), net real wages (constant euros 2004) (source DADS) 60000 Managers, professionals & experts 50000 Cadres 40000 x3 Professions intermédiaires Lower professionals 30000 20000 Employés / Ouvriers Routine white or blue collars 10000 Period 0 1940 1950 1960 1970 1980 1990 2000 2010

9. Impact of the new context on cohorts ?Distribution of wages

10. 130% 125% 120% 115% 25-29 y 110% 30-39 y 105% 40-49 y 100% 50-59 y 95% 90% 85% 80% 1960 1970 1980 1990 2000 2010 • Impact of the new context on cohorts ?Distribution of wages DECLINE OF EARNING LEVEL : Relative wages of 4 age groups Level of wage (100= french average) • Sources : Déclarations annuelles de données sociales–INSEE

11. Impact of the new context on cohorts ?Access to middle class • Scarring effect • Proportion of higher+lower white collars 1970-2005 Year Age

12. Impact of the new context on cohorts ?Access to middle class • Scarring effect • Proportion of higher+lower white collars 1970-2005 Age Cohort

13. Educational expansion • Proportion Bac and + (end of secondary educ) 1970-2005 Age Cohort

14. Educational expansion • Proportion Licence and + (B.A. and more) 1970-2005

15. Impact of the new context on cohorts ? • Educational inflation • % of Baccalaureat holders accessing service class (h+l) 1970-2005 Age Cohort

16. Impact of the new context on cohorts ? • Educational inflation • % of Licence holders who access higher service class 1970-2005 Age Cohort

17. New generation’s housing crisis in France Average yearly expenditure per room (renting or reimbursment)Dépense annuelle moyenne par pièce (Euro 2000) (location ou remboursement) Euros 2000 2000 1984 1994 1999 1000 Age 0 moins 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 plus de 25 de 75 Source : family budget surveys INSEE 1984-2000

18. Slow growth and young wage earners marginalization Wage growth and housing index in Paris (real terms) (100 = 1996) 1996-2006 Housing index Wages Année Source : Insee, Notaires d'Île de France - Base BIEN

19. Repatrimonialisation : Cultural and Economic Capitals :France failed in its entry in the “knowledge society” Inequality of what ? In France, increasing inequalitiesbut not connected to work. Farewell to the “wage earner society” The come back of heritage and rent The middle classes adrift 2006

20. Interpreting the French case: • Esping-Andersen Typology of Welfare states: France = “corporatist-conservative” « welfare mix », stabilization of social relationsProtection of insiders (protected male workers) against outsiders • In case of economic brake : « Insiderisation » of insiders, already in the stable labor force and « outsiderisation » of new entrants • In France, young people can wait … decades Increasing poverty rates for young people, stable intracohort inequalities (after taxes and welfare reallocations) • Are other intergenerational compromises possible ?

21. III. A four models comparison : how to share slow down between and within cohorts ? • French specificity? Homogeneity, Centralization, Excesses, (and backlashes…) • A universal evolution in « post industrialized countries »facing slow growth? • Role of history / role of welfare models (Esping-Andersen)

22. Three (+1) modalities Esping-Andersen Typology of Welfare states : • Conservative model (Continental Europe) : FRANCE Preservation of (old) social equilibria, with social insurance excluding unemployed => strong intercohort inequalities and less intracohort inequalities than in the Liberal model (but younger cohorts face stronger intracohort inequ.) • <Familialistic Model (Mediterranean Europe) : ITALY><Conservative + family and local and clientelistic solidarities> • Liberal model : (Anglo-saxon world) : US Market as a central institution, residual welfare state against market failures HL0 : more intracohort inequalities HL1 : less intercohort inequality (competition between generations) • « Social-democrat » Model (Nordic Europe) : DENMARK + FINLANDCitizenship and broad participation to discussions and bargaining around social reforms between social groups (gender, generations, etc.) for a long-term development HD0 : less intracohort inequalities HD1 : residual intercohort inequalities (positive compromise between generations)

23. Purchasing power parity real per capita GDP (1960-2003)Source : Penn world tables 6.2

24. PPP real per capita GDP (2000) and Interdecile ratio 2000Source : Penn world tables 6.2 Inequality : D9/D1 Real GDP per cap

25. Dynamics of intercohort inequalities age median (1=nat. median income)Source : Lisproject data own calculations – standardized disposable family income DK FR age age US IT age age

26. Dynamics of intercohort inequalitiesSource : Lisproject data own calculations FINLAND

27. Dynamics of intracohort inequalities (interdec ratio D9/D1) Source : Lisproject data own calculations DK FR age age US IT age age

28. Dynamics of intracohort inequalities Source : Lisproject data own calculations FINLAND

29. Return to intermediate level education (end of secondary) (1= nat. median inc.) Source : Lisproject data own calculations DK FR age age US IT age age

30. Return to end of secondary education level (1= nat. median inc.) Source : Lisproject data own calculations FINLAND

31. Shape of tertiary education development Source : Lisproject data own calculations DK FR age age US IT age age

32. Return to end of secondary education level (1= nat. median inc.) ²Source : Lisproject data own calculations FINLAND

33. Main results : 1- More intercohort inequality in France and Italy (temporarily blurred in Italy by the collapse of fertility rates) 2- More intracohort inequality in US 3- Less intra and intercohort inequality in DK 4- Strong decline in the value of intermediate education in France, concentrated in the cohorts of young adults ; in Italy on the first third of adult life. Smoother decline in DK and US. 5- Stronger inter cohort contrasts in France and Italy (insider/outsider polarization) but continuity in DK and US.

34. Conclusion : The comparative evolution of the intermediate educated middle class • Conclusions in terms of Middle class dynamics • Even if challenged, the nordic middle class are less destabilized by the decline of return to middle education • The US polarization of incomes has created a massive destabilization of the intermediate middle class… In the early 1980’s (1985=>2000 stability) • In France and Italy : strong paradox : for seniors, a realm of intermediate educated middle class, but massive decline in the perspective of younger cohorts (their own children) • Consider not simply incomes but also wealth :A return to economic asset based middle class and destabilization of educational based middle class. Scarcity of wealth and affluence of education…

35. Three great models of evolution : • Continental and Mediterranean Europe (+ Japon) : protection of insiders against outsiders (new generations are facing major difficulties) • United States and anglo-saxon countries : the new generations, in the average, face difficulties, but higher inequalities imply a divergence between lowest and highest income groups and social classes • Northern Europe : Closer to a universalistic egalitarian equilibrium between age groups, genders and social classes (lower intra- and inter- cohort inequalities) • (Long Range Hypotheses) Emerging countries : • in fast growth countries (China, Taiwan ?, India, Central-Easter Europe) : new opportunities for newer cohorts, and higher inter- and intra-cohort inequalities to the benefit to young university graduates • in stagnation countries (Argentina, Northern Africa) : intergenerational inequalities and generational destabilization (inflation of diplomas and declining return to education)