Introduction

The argument for the social investment strategy depends on the ability of the strategy to produce employment and particularly employment in high-quality jobs, jobs that are attractive in terms of remuneration and in terms of quality of work. It is really that latter ambition that distinguishes the promise of the social investment strategy from a neoliberal strategy which creates employment by increasing wage dispersion and creating a large number of low-paid private service jobs in sectors such as hotels, restaurants and personal services, which has been the US path to high employment (Esping-Andersen, 1999).

Our analysis is an evaluation of whether this strategy has delivered on these aforementioned promises. First, in a pooled time series analysis of data on 17 OECD countries from 1972 to 1999, we examine the effect of various policies we identify as related to the social investment paradigm on employment levels, both for the economy as a whole and for a subset of knowledge-intensive industries. We consider employment in knowledge-intensive services to be a good measure of the level of quality employment. We find that short-term unemployment replacement rates, active labour market policy, day care spending, sick pay, education spending and educational attainment are very strongly related to employment levels, and that all of these policies with the exception of sick pay are very strongly related to employment levels in knowledge-intensive services.

Second, in a cross-sectional analysis we examine whether social investment is associated with high levels of discretionary learning employment, arguably the best available measure of quality employment (see Chapter Nine). For this analysis we bring literacy into the equation to understand the relationship between social investment policies, skill acquisition and employment. It is, in fact, the accumulation of human capital which links social investment policies to employment outcomes. Establishing a relationship between these three factors is therefore critical to sustaining the validity of the theoretical arguments put forth thus far. Because our key variable is only available cross-sectionally, our analysis is necessarily tentative, but we do find strong evidence affirming a positive relationship between social investment policies, human capital and quality employment. In short, the results provide substantial evidence that the policies associated with the social investment perspective lead to the expansion of employment, particularly employment in quality jobs.