The unexpected curse for a Social Investment Turn: How Germany’s ‘decision trap’ outperformed France’s dirigisme

In continental Europe, welfare regimes have been shown to usually follow a path-dependent trajectory. Looking back at the last two decades, reforms in the realm of labour market policy yet reveal a puzzling development. In Germany, the case example of a conservative welfare regime, a major social investment turn – better integrating demographic trends and work-life balance concerns – occurred, in spite of the multiple ‘decision traps’ provided by its federal system. In France, although the country relies on a long-welfarist tradition and a political system with high power concentration, neither the social-democratic Hollande nor the liberal Macron managed to advance a more inclusive employment growth agenda. Why did such a shift occur in Germany and not in France? To account for differences in social investment reforms, scholars today generally look at the evolution of welfare preferences or the structure of party politics – both of which provide limited explanatory power to these evolutions. Building on the analysis of government reports and 14 semi-structured interviews with national and EU civil servants and members of the civil society, I show how inter-ministerial and multilevel governance dynamics in Germany helped cultivate, rather than impeded, a process of progressive recalibration. By contrast, heightened dirigisme, combined with a ‘tit-for-tat’ politics incentivised by France’s majoritarian regime, lead to distributive conflicts stalling the reform process and trumping the government’s experiential capacity. Comparative research should further investigate whether other unexpected deviations from labour market policy legacies may also be explained by the incentive structure of a country’s macropolitical arrangements.