One market, how many social models? Policy and performance indicators for the EU-27.

This paper documents the diversity of the social models in the EU-27 countries, by comparing indicators of policy inputs, outcomes and of economic performance, for the period 2000-2005. In the first part, I analyze some implication of the heterogeneity of social models for the EU internal market. In particular I argue that there is no need to harmonize social policies across member states, and that their differences are a value in itself and are compatible within the internal market. The second part documents to what extent labor market policies of the EU members are different from each other, and also correlates policy differences to differences in labor market outcomes. In general, it is found that countries which are more "generous" (as measured by the overall size of Labor Market Programmes relative to GDP) generally display higher employment rates and appear more successful than others at reducing poverty risk. The paper also documents how the new member states of the EU compare to the older members, and provides tentative evidence of a slow "de facto" convergence of the different social models.