Social Protection Convergence in the European Union: Impact of Maastricht Treaty

Abstract

The main goal of this paper is to test the convergence of social protection expenditures and, more specifically, to examine the incidence of the Maastricht Treaty on this process. We tested several hypotheses of convergence on 12 EU Member States between 1980 and 2000, by considering two indicators: social protection expenditure as percentage of GDP and social protection expenditure per capita. The cross sectional tests of a and ß-convergence show that, for the two indicators, these two assumptions are checked for the whole of the period. On the other hand, the period division in two sub-periods intended to locate the Maastricht effect indicates a rupture since 1993. Then, panel data estimations of conditional ß-convergence confirm the existence of a process of conditional convergence and reveal the significant role of the debt criterion of Maastricht. The coexistence of absolute and conditional ß-convergence is not incompatible. It evokes the possible idea of a European "Social Snake" rather than of a single Social Model.

Key words: Welfare-state, Social protection, Convergence, European Union, Panel data estimation.
JEL: H53, O52, I38.