1. Introduction. Estonian Social Model in a Comparative Context

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1 Estonian Social Model in a Comparative Context Kaire Poder, University of Technology, Estonia Kaie Kerem, University of Technology, Estonia Abstract: We show that recent geographical divisions of the European Social Model (ESM) Nordic, Anglo-Saxon, Mediterranean and Continental basically follow the Esping- Andersen s (1990) welfare regime typology. Esping-Andersen s criteria of decommidification and stratification create the following typologies of the welfare states: liberal, conservativecorporatist and social democratic. To compare Estonian social model we focus on seven countries. In addition to Estonia three Nordic countries are chosen Finland, Sweden and Norway as the best representatives of Nordic tradition of welfare state. Another three countries USA, UK and Ireland are stated as examples of liberal welfare state and often regarded as counter-examples of Nordics. We use the comparative analysis to compile scaled variables of certain countries that measure decommodification (10 variables) and stratification (6 variables). All data cover averages of the period 2000 to According to our results social democratic Nordic countries have low stratification and high decommodificaton scores compared to Anglo-American liberal regimes. In general Estonian social model is even more liberal than typical representatives of this typology. So we argue that future policy choices cannot be justified by just following a certain type of social model. Based on the empirical results, we dispute that Estonian social policy choices are rather normative, although there is some positive economic theory indicating that a welfare state can enhance efficiency only when its welfare system creates institutions that heal market failures. 1. Introduction Ever since its appearance in 1990, Esping-Andersen s typology of welfare regimes (Esping- Andersen 1990) has been a subject of both praise and criticisms. In extreme Baldwin (1996: 29) states that typologizing (...) is the lowest form of intellectual endeavour. Nevertheless, in addition to the criticism on the scholarly activity of creating typologies as such, also a wide variety of competing typologies and additions have been proposed. In the 1990s political contest between the Anglo-American model of liberalized markets lacking a social dimension, and an inflexible European social model (ESM) of generous welfare provision, but slow growth and high unemployment, has started. After the transition of post-soviets some extensions of post-soviet type appeared, which contributed even more to the political choices over social spheres. This article examines to what extent the Estonian social model fits into Esping-Andersen s typology and what the differences are between Estonian, Nordic (also called Scandinavian) and Anglo-Saxon (Anglo-American) social models. Also Sapir s (2005) hypothesis that the Nordic model affords equity without sacrificing efficiency is checked and rejected. For these typologies of different traditions, welfare state classifications and ESMs are compared; and the economic efficiency of both traditions is assessed. Instead of creating new typologies or criticizing old ones, we aim at typologizing the Estonian model by constructing

2 decommodification and stratification scores. To narrow down the context, we focus our discussion on certain types of ESM Nordic and Anglo-Saxon. To conclude we try to answer the question: Does economic theory suggest any positive set of institutional structures that are likely to achieve the stated welfare policy objectives? Esping-Andersen believed that divergent post-communist regimes would shift towards some of the main welfare regime types after 15 years of transition (Esping-Andersen 1996). This period was approximately over for Estonia in Even if the transition period appeared to be longer than predicted due to some unanticipated path dependency, we intend to show in what direction Estonia is shifting towards the liberal or the social-democratic regime. Almost a parallel typology is common to the European Union (EU) where Anglo-Saxons coincide with liberal; and the rest three with continental, Nordic and Mediterranean, can be divided between social-democratic and conservative-corporatist regimes. The Nordic model overlaps with the social-democratic welfare regime almost entirely. Although the Estonian social model has many features similar to the Anglo-Saxon model, we may find some soviet heritage, which creates similarities with the Nordic model as well. Liberal developments were reinforced by the work of international organizations, mainly IMF, and the movement towards the European model dominantly by applying for and gaining the membership in the EU. In the EU social policy is still mostly a national affair. So path-dependent legacies of the soviet era may still be as influential as trends of Europeanization. Positioning Estonian social model in Esping-Andersen s typology and more specifically in a comparative system of ESMs gives us an opportunity to understand the sphere of possible political reforms. Of course, these political changes are constrained by inevitable demographic changes and legal amendments. As Esping-Andersen states: The existence of policy regimes reflects the circumstance that short term policies, reforms debates, and decision-making take place within frameworks of historical institutionalization that differ qualitatively between countries (Esping-Andersen 1990:31). The current article proceeds as follows. The next section discusses Esping-Andersen s typology. The third section concentrates on the existence of ESM and the subtypes of this model. In the fourth section the Estonian social model is discussed and positioned in the light of Esping-Andersen s criteria and six countries with which it is compared. Finally we sum up. 2. Typology of welfare states The central argument of Esping-Andersen is that welfare states cluster around three distinct welfare regimes. The concept of welfare state regimes includes the institutional arrangements, rules and understandings that guide and shape concurrent social policy decisions, expenditure developments, problem definitions, and even the respond-and-demand structure of citizens and welfare consumers (Esping-Andersen 1990:23). In the current article we use the terms welfare regime and social model as synonyms although social model is used in the literature mostly in the European context while welfare regime is used more widely. Esping-Andersen distinguishes three regimes by the degree of decommodification and the kind of stratification they produce in society. Decommodification occur when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market (Esping-Andersen, 1990:21-22). Stratification refers to the outcome of

3 redistribution and the level of universality of solidarity that is imposed by the welfare state and it reflects inequality in society. Based upon these two dimensions, Esping-Andersen distinguished between (a) liberal, (b) conservative-corporatist and (c) social-democratic welfare states (see Table 1). Table 1. Esping-Andersen s typology of welfare regimes Liberal Conservative Socialdemocratic Decommodification: low medium high Stratification: dual: meanstested programms promoting market in social provision high: insurancebased schemes to preserve social rights according to status Examples: (Source: Esping-Andersen 1990) US, UK, New Zealand, Ireland Germany, Switzerland, France, Austria low: universal entitelments for preserving equality Sweden, Finland, Norway Liberal welfare states are characterized by means-tested assistance, modest universal transfers, or modest social insurance plans. Benefits go mainly to the low-income, usually to working-class. There is little redistribution of incomes. The conservative-corporatist type is characterized by a moderate level of decommodification. The direct influence of the state is restricted to the provision of income maintenance benefits related to occupational status (Arts and Gelissen 2002). In the social-democratic type, the level of decommodification is high. The generous universal and highly redistributive benefits do not depend on any individual contributions (Esping-Andersen 1990). The publication of The Three Worlds of Welfare Capitalism (Esping-Andersen 1990) triggered a wide variety of reactions. Many additional welfare types were proposed, like a Southern or Mediterranean type (Bonoli 1997; Ferrera 1996), an East Asian or Confucian type (Jones 1993; Kwon 1997), and a radical or antipodean type to distinguish Australia and New Zealand from other liberal regimes (Castles 1998; Castles and Mitchell 1991). And finally there were authors who radically rejected the idea of a general welfare typology (Kasza 2002; Lewis 1992). Kasza (2002) argues that most countries practice a disjointed set of welfare policies due to the following typical features of welfare policy making: (1) the cumulative nature of welfare policies, (2) the diverse histories of policies in different welfare fields, (3) the involvement of different sets of policy actors, (4) variations in the policymaking process, and (5) the influence of foreign models (Kasza 2002). However, most authors agree upon some Kasza s criticism, they just have used different labels, or try to find better typologies to overcome the criticism. For instance, Leibfreid (1992) identifies four social policy or poverty regimes, based on different policy models: modern, institutional, residual and rudimentary. Leibfreid (1992) distinguishes between the Scandinavian welfare states, the Bismarck countries, the Anglo-Saxon countries and the Latin Rim countries (Leibfreid 1992). However, with some exclusion, his classification converges completely with Esping-Andersen s typology (Arts and Gelissen 2002). Also Ferrera (1996) comes to virtually

4 the same classification, including a fourth, Southern-European type. Bonoli (1997) is critical of Esping-Andersen s decommodification approach. As an alternative, he bases his classification on the extensiveness of the welfare state (indicated by social expenditures as a proportion of GDP) and the way the welfare state is financed (indicated by the percentage of social expenditures financed through contributions). Focusing on European countries only, he labels the resulting types the British, Continental European, Nordic and Southern. Again, the first three types more or less coincide with Esping-Andersen s typology, the differences between this typology and Esping-Andersen s original classification stem from the addition of the Southern type (Arts and Gelissen 2002). Castles and Mitchell (1991) propose a similar alternative; based on the level of welfare expenditure, average benefit equality, and income and profit taxes as a percentage of GDP. Several authors have tried to apply the welfare regime typology to transitional or developing countries. According to Jones (1993), the East-Asian welfare states do not fit in any of Esping-Andersen s categories, although the conservative type comes closest. Ferge (2001) stated that though there are formal similarities between the Bismarckian welfare system and the Eastern European welfare system, the essence of what is called the European model is almost totally absent in the latter because most CEE-governments have to acquire the goodwill of foreign capital and supranational agencies to manage their financial problems (Deacon 2000; Ferge 2001). More recently Fenger (2005) also demonstrated that post-soviet countries can be clustered differently from other types. In contrast, Rys (2001) rejects the idea of a distinctive post-communist welfare type by pointing out the high level of variety between these countries. To sum up, Esping-Andersen s (1990) typology is still very much in use. However, new types or different labels are added despite academic critique. Also empirical testing assures that social policies and institutional settings of countries differ and these differences may justify their typologization under: liberal, social-democratic and conservative-corporatist regimes. We will see that the last typologization overlaps with the terminology used in classifying European models: Anglo-Saxon; Nordic and Continental. 3. What is the European social model? The term ESM was first invented to symbolize Delor s vision of social-democratic Europe and build an alternative to the free-market style capitalism that dominated Britain and the USA (Hermann and Hofbauer 2007:127). As a concept to mark European welfare states the ESM started to evolve in the mid-1980s, whereas during public welfare state spending at least doubled in most industrialized countries (Barr 1992). However, this model has national roots, not European. According to Ferge (2002), the ESM is based on respect for the values of the trinity of enlightenment : freedom, equality and fraternity. In other words, some authors (Ferge 2002, Hermann and Hofbauer 2007, Juhasz 2006) like to stress that the main feature of the ESM is solidarity between different members and groups of the society along with the great concern to (in)equality. In official documents (Social Policy Agenda of the Council) the ESM is characterized by a system that offers a high level of social protection, by the importance of the social dialogue and by services of general interest covering activities vital for social cohesion. Addison and Siebert (1991) call the end of the 1980s a re-regulation phase in the European political process, and argue that the Social Charter did nothing to lower the barriers to competition that lead to inequality of opportunity. However, recent neoliberal

5 modernizations have amended ESM characteristics and according to Hermann and Hofbauer (2007) competiveness has become a precondition for being successful and being able to retain high labour and social standards. Instead of building an alternative to American free-market capitalism, the ESM is now seen a problem creator. These problems are low economic growth rates, increasing unemployment and missing incentive structure for increasing efficiency and sustainability (Hermann and Hofbauer 2007). In addition to stressing shortcomings of the ESM ultra-protection for the elderly at the expense of protection in other stages of life and social policy in the interests of strongest social groups instead of most vulnerable (Ferrera 2004) also the question arises: Is there such common model at all? In autumn 2005 a Brussels-based think tank published a study by Sapir (2005), which answered the question by extinguishing four different types of ESMs and propagating one of them the Nordic model. As a response in 2006 a liberal think tank Open Europe published a bulletin showing that there is no ESM of any kind and criticizing most severely the Nordic model. Although academic dispute and policy lobby should not overlap, social models and welfare are undoubtedly areas where ideological mind-set may influence academic discussion. However, we try to be transparent and not to give any normative advice. We just ask: Is there a typology that can be used for identifying Estonia s position in the social arena and can this help us to specify policy choices for the future? The first part of the question is dealt with in the current section. Although there has been no agreement on a common definition of the European model it has been customary to identify three characteristics: responsibility, regulation and redistribution (Aiginger and Guger 2006). First, it is the range of responsibility the welfare society has taken in different countries, that is how much individual risks are reduced in the case of poverty, illness, disability, unemployment, education, support of families and old age. Second, regulation of the markets differs by societies; that is, labour relations may be institutionalized, business environment may be shaped with all kinds of business entry exit affairs administrated. We state that the first two characteristics basically reflect decommodification principles of Esping-Andersen. Also redistribution between income groups differs by countries, which reflects the stratification criteria stated by Esping-Andersen. However, Sapir s (2005) typology prevails in many recent publications (e.g. Aiginger and Guger 2006; Guger, Leoni, Walterskirchen 2007; Chytilova and Mejstrik 2007). According to this, four types of ESMs are specified: Nordics, Continentals, Anglo-Saxons and Mediterraneans. Basically, Nordics overlap with Esping-Andersen s social-democratic regime, Anglo-Saxons with the liberal and Continentals with the two conservative-corporatist division. We have to admit that such geographical division (Sapir 2005) has no clear theoretical definition; rather it is a descriptive typology. Political contest or ideological struggle between Anglo-Saxon liberalism and the European social model has weakened after the Lisbon process (Juhasz 2006). In addition to changes in political rhetoric in 1990, when the ESM turned more to the growth and efficiency system also the ESM or ESMs anticipated some institutional changes. However, these changes did not affect the structure of welfare arrangements of the EU fifteen member states (Ferge 2002:12). Cuts of welfare benefits mainly occurred in high spending Scandinavian countries (Finland and Sweden), while continental welfare states stagnated and countries of the Latin rim tended to increase their expenditures (Juhasz 2006:87). Ireland has radically cut its social expenditure while cuts in the United Kingdom and USA did not occur at all (see Table 2). In

6 the Nordics the employment rate is higher than in the others while unemployment figures have been higher than in the liberal regimes. Also female representation in the labour force is highest in Nordics, followed by Anglo-Saxons. Sapir s (2005) two-dimensional efficiency-equity scaling classifies Anglo-Saxons to the group of high efficiency and low equity and Nordics to both high equity and high efficiency. At the same time Sapir s typology has little empirical verification. Table 2. Comparison of EMSs and the USA Gini Social expenditures coefficient** (average, % of GDP)** Employment rate** Female participation Total Per capita income* (in us dollars, current prices) Economic growth (average %)** Unemployment (% of total labour force)** Sweden 30,3 29,9 24,3 74,5 77,7 7, ,1 3,0 Denmark 25,9 26,7 22,5 76,9 76,7 3, ,0 1,9 Finland 23,3 21,8 26,1 68,9 73,2 7, ,0 3,4 Norway 20,2 23,8 26,1 75,5 74,8 3, ,9 2,6 Nordidics 24,9 25,6 24,8 74,0 75,6 5, ,5 2,7 Germany 23,9 26,7 27,7 67,2 68,5 8, ,0 1,5 France 25,0 27,9 27,3 62,3 63,9 9, ,4 2,1 Austria 24,2 25,6 25,2 70,2 67,0 4, ,7 2,1 Belgium 25,2 27,9 27,2 60,4 58,9 8, ,5 2,2 Continentals 24,6 27,0 26,9 65,0 64,6 7, ,4 2,0 United States 13,7 15,5 35,7 72,0 69,3 4, ,8 2,5 United Kingdom 18,4 20,0 32,6 72,5 70,3 5, ,1 2,8 Ireland 17,6 14,9 30,4 68,1 61,3 4, ,3 5,8 Anglo-saxons 16,6 16,8 32,9 70,9 67,0 4, ,1 3,7 Greece 16,8 21,6 34,5 61,0 55,0 8, ,6 4,3 Portugal 13,4 21,7 35,6 67,9 68,4 7, ,6 1,4 Spain 18,7 20,3 32,9 65,7 61,0 8, ,4 3,6 Mediterranean 16,3 21,2 34,3 64,9 61,5 8, ,2 3,1 (Source: * IMF; ** OECD) Table 2 also shows that recent economic growth rates of the liberal regimes have been above Nordics, although Gini coefficients represent an inequality gap. However, Hopkin and Wincott (2006) assure that Nordics have recently performed well both in terms of economic efficiency and socially. They assure that there have been also opposite examples and even more, countries that perform badly on both the economic and social dimensions. At the same time De Vlieghere (2006) and Lindbeck (1997) show that the efficiency of major Scandinavian economies is a myth. Due to the distortionary and heavy tax burden lower growth, unemployment trap and excessive sickness leave are created (Mullally 2006). Instead Gurdgiev (2006) presents Ireland and Kitsing (2006) Estonia as raw models. Kitsing (2006) reminds that correlation does not equal causation and that ( ) achievements of the Nordic countries may have materialized despite their being welfare states (Kitsing, 2006:57). This convinces us that the discussion about relationships between efficiency and equity is still open. Moreover, empirical tests are heavily dependent on the statistical data, methodology and periods used in the analysis.

7 4 Estonian Social Model in a comparative perspective As we saw, the definition of the ESM by Aiginger and Guger (2006) can be easily fitted in Esping-Andersen s criteria and Sapir s (2006) typology is ambiguously defined or rather geographically positioned. Thus we would rather pose the Estonian Social Model in Esping- Andersen s (1990) typology. For these two criteria, decommodification and stratification have to be scored. To describe the Estonian Social Model we have to remind the path dependent characteristics of the state s socialist social policy. Ferge (2002) argues that despite formal similarities, the liberal and emancipating dimensions of the Scandinavian model were entirely absent from this model, which formed an anti-liberal, statist, hierarchical, socialist mix, with conservative elements thrown in. Partly it is, after 15 years since the start of the transformation process, still difficult to classify the Estonian social model. It is clear that (see Table 3) Estonia has much higher income inequalities, much lower social expenditures and per capita income than in EU 15. At the same time there is no major difference in unemployment and employment rate and female participation rate, even compared with Scandinavia. Labour regulations like collective bargaining or other social consensus based institutional settings are limited due to low unionization and also labour market programmes are very few in Estonia. Table 3. Labour market and income statistics in respective countries Unemploy ment* Long term unemploym ent* Employ ment* Female participati on* % of employees in unions (average)* Per capita GDP (in dollars, current prices)** Public expenditure in Economic labour market growth* programms (% of GDP)* Gini coeffi cient* EU 15 7,4 60, , ,34 2,1 28,4 Finland 7,8 39,7 68,9 73,2 77, ,79 3,4 26,1 Sweden 7 27,8 74,5 77,7 80, ,52 3,0 24,3 Norway 3,5 32,3 75,5 74,8 54, ,62 2,6 26,1 USA 4,6 17, ,3 12, ,38 2,5 35,7 UK 5,3 40,9 72,5 70, ,68 2,8 32,6 Ireland 4,4 53,2 68,1 61,3 38, ,46 5,8 30,4 Estonia***,*** 5,9 48,2 64,7 65,1 11, ,13 7,5 36,0 (Source: *OECD; ** IMF, *** Estonian Statistical Office, ****Estonian Social Ministery) The heritage of the Soviet regime comprises traditions that may resemble Nordic models the first glance (e.g. with regard to female participation in the labour market or egalitarian educational capital). At the same time the ideological economic policy of the 1990s favoured the liberal type of welfare state. Thus reforms that Estonia has made have tended to drive the system toward the Anglo-American liberal regime. Instead the EU, World Bank and IMF have had an advisory role in the shaping of Estonian social policy, like in many other East-Central European countries (Juhasz 2006:92). Emphasis was given to the need to weaken public responsibility in social matters, to target social assistance on the truly needy, to scale down social insurance, to assure work incentives, and to abolish universal benefits (Ferge 2002). As a consequence, a three-pillar funded pension system was gradually enforced during , including the step-by-step increase of retirement age accommodated by the principle of gender equality and relating contributions to future transfers. This was supported by IMF memorandums, stressing the aim of initiation of private savings. In 1992, the Health Insurance Fund, financed through social tax, was created It uses solidarity

8 principle in the distribution of benefits. The administrative reform, partly financed by the World Bank, changed the structure of medical care. Much less has been done in the labour market. Still, an unemployment insurance fund started to collect compulsory premiums in Starting from 2006 insurance benefits cover 50% of the wage during the first 100 days of unemployment and 40% during the rest of one year. Although a huge part of education and health care is publicly financed in Estonia (see Appendix 1), the government-run fund does pay unemployment benefits and most of Estonia has significant spending and redistribution policies, these lack the extensiveness and intensiveness of those in the Nordic countries as Kitsing (2006:59) states. However, on comparative basis we have neither analytical data about the recent developments under the liberal-minded political right wing government nor information of the position Estonia is taking in the liberal social-democratic scale. Therefore we made comparative analysis compiling scaled variables of certain countries that measure decommodification (10 variables) and stratification (6 variables) (see Appendix 2). All data cover averages of the period 2000 to recent, only in the case of Estonia this observation period is divided into two phases: from 2000 to 2004 (Est 1) and from 2005 to 2007 (Est 2). Figure 1: Decommodification and stratification in Nordic, Anglo-Saxon and Estonian social models Figure 1 shows that all three Nordic countries can also empirically be classified as countries with low stratification and high decommodification. However, in scaling liberal Anglo-Saxon countries are performing better than Estonian in both criteria. This means that Estonia is even more liberal than the typical representatives the USA, UK and Ireland are. Still, recent developments (Est 2 compared to Est 1) indicate less social stratification, so that Estonia is reaching the level of Ireland and the USA, but no change in the level of decommodification. We may say that in general the Estonian social model resembles a typical liberal welfare regime, being even more extreme in its relying on and believing in markets. Will this help to achieve the main goals of the social institution efficiency and equity? The answer depends upon the relationship between these two, namely on whether these are contradictory aims or not.

9 5. Summary Esping-Andersen s (1990) criteria are not normative in essence and are not suggested as a valuable final destination; rather, the authors used this typology for building up pillars for a comparative scale to position the Estonian social model. We saw that based on two pillars, decommodification and stratification, Estonian social model is even more liberal than the raw models of the USA, UK or Ireland. However, this mapping does not give us any information about the relative desirability of recent developments or on the desirability of future trends. Thus we also posed the question similar to Sapir s (2005) statement: Can more equality bring also efficiency? Or is Nordic model desirable for Estonia? Unfortunately, we are not able to formulate a statistically substantiated answer and can only rather speculatively argue that there is no clear connection between the type of ESM and economic efficiency. However, there is a weak causality between prosperity and equality. Yet at the same time less equality may allow faster economic growth. Consequently we may say that empirical traits did not give us any assurance about the desirable future path. Still, we can conclude that the Estonian system is so far as liberal as you can get compared to typical countries. This means that Estonia s social institutions rely more on markets than our European (or American) counterparts. Although inequality has decreased in Estonia during a few recent years, the possible political arena for social changes is still not clearly defined. Thus ready made systems do not give us any sound justification for the desirable path Estonia s social sphere should follow and we have to turn to relatively narrow set of principles of economic theory which may help us find some positive ground for making normative political decisions. References Addison, J., Siebert, S. (1991). The Social Charter of the European Community: Evolution and Controversies. Industrial and Labor Relations Review, vol. 44(4), Aiginger, K., Guger, A. (2006). The Ability to Adapt: Why It Differs between the Scandinavian and Continental European Models. FORUM: Intereconomics, January/February. Arts, W., Gelissen, J. (2002). Three worlds of welfare capitalism or more? Journal of European Social Policy, vol. 12 (2), Barr, N. (1992). Economic Theory and the Welfare State: A Survey and Interpretation. Journal of Economic Literature, vol 30(2), Baldwin, P. (1996). Can we define a European welfare state model? In B. e. Greve (Ed.), Comparative Welfare Systems, London: Macmillan. Bonoli, G. (1997). Classifying Welfare States: a Two Dimensional Approach. Journal of Social Policy, 26 (3), Castles, F.G. (1998). Comparative Public Policy: Patterns of Post-war Transformation. Cheltenham: Edward Elgar. Castles, F.G., Mitchell, D. (1991). Three worlds of welfare capitalism or four? Canberra: Graduate Program in Public Policy. Chytilova, J., Mejstrik, M. (2007). European Social Models and Growth: Where are the Eastern European countries heading? IES Working Paper, 24. De Vlieghere, M. (2006). The myth of the Scandinavian model. In Mullally, L., N. O Brien (Eds.), Beyond the European Social Model. Open Europe Bulletin.

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11 Sapir, A. (2005). Globalization and the Reform of European Social Models. Bruegel policy brief, No 1, November. Appendix 1: Composition of statistical data ( ) Estonian model Nordic model Liberal regime latest Finland Sweden Norway USA UK Ireland 1. Characteristics of decommodification 1 Total government expenditures (average, % GDP)' 35,2 33,4 49,0 55,3 45,4 36,6 42,0 33,8 2 Government health expenditures (average, % of GDP)** 4,1 4,0 5,8 7,5 7,7 6,6 6,6 5,6 3 Public spending on education (% GDP)** 5,6 6,1 6,3 7,5 7,2 5,8 5,0 4,4 4 Number of physicians (per 1000 persons)** 3,2 3,2 2,7 3,3 3,4 2,2 2,4 2,6 5 Female participation (% )** 61,4 64,2 72,7 77,2 76,1 69,7 69,7 58,6 6 Employment rate (%)** 61,8 67,3 68,0 72,8 76,1 72,1 71,4 66,7 7 Government expenditures to social benefits (% of GDP)** 11,0 10,7 18,1 19,8 16,1 12,0 12,7 10,5 8 Income share held by lowest 20%** 6,7 6,0 9,0 9,1 9,6 5,4 6,9 7,4 9 Life expectancy (years) * 71,0 73,0 79,0 81,0 80,0 78,0 79,0 79,0 10 Relevance of trade unions (% of employees in trade unions)*** 12,3 8,5 77,2 80,5 54,3 12,9 31,0 38,1 2. Characteristics of stratification 1 Inequality (Gini coefficient) 2005** 36,6 36,3 26,1 24,3 26,1 35,7 32,6 30,4 2 Poverty rate (% after taxes and transfers) ** 22,6 17,9 3,4 3,6 3,6 21,7 16,2 15,7 3 Total fertility rate (births per woman)* 1,4 1,5 1,8 1,7 1,8 2,0 1,7 2,0 4 Infant mortality (smaller than 5 years per 1000 births)* 11,0 5,0 4,0 3,5 4,0 7,8 6,0 5,8 5 Unemployment ' 11,8 6,5 8,3 6,3 3,9 5,3 5,1 4,5 6 Long-term unemployment (% of total employment)** 49,0 50,4 40,9 32,5 25,9 20,3 38,8 54,5 (Source: *World development indicators; ***IMF, ' Eurostat, **OECD) Appendix 2: Scaled variables (1-0 scale) and totals of decommodification and stratification Estonian model Nordic model Liberal regime latest Finland Sweden Norway USA UK Ireland 1. Decommodification (max 10) 6,757 6,787 8,916 9,875 9,275 7,099 7,585 7,096 1 Government expenditures 0,637 0,604 0,886 1,000 0,821 0,662 0,759 0,611 2 Government health expenditures 0,541 0,533 0,774 1,000 1,023 0,876 0,882 0,747 3 Government education expenditure 0,751 0,813 0,841 1,000 0,970 0,772 0,676 0,588 4 Physicians 0,938 0,950 0,794 0,971 1,000 0,647 0,706 0,765 5 Female participation 0,795 0,832 0,942 1,000 0,986 0,903 0,903 0,759 6 Employment rate 0,812 0,883 0,893 0,957 1,000 0,947 0,938 0,876 7 Government expenditures to social benefits 0,556 0,540 0,914 1,000 0,813 0,606 0,641 0,530 8 Income share held by lowest 20% 0,698 0,625 0,938 0,948 1,000 0,563 0,719 0,771 9 Life expectancy 0,877 0,901 0,975 1,000 0,988 0,963 0,975 0, Relevance of trade unions 0,153 0,106 0,959 1,000 0,675 0,160 0,385 0, Stratification (max 6) 5,599 4,461 3,582 3,121 2,941 4,466 4,147 4,433 1 Inequality 1,000 0,991 0,713 0,664 0,713 0,975 0,890 0,830 2 Poverty rate 1,000 0,792 0,150 0,159 0,159 0,960 0,717 0,695 3 Total fertility rate 0,700 0,750 0,900 0,850 0,900 1,000 0,850 1,000 4 Infant mortality 1,000 0,455 0,364 0,318 0,364 0,709 0,545 0,527 5 Unemployment 1,000 0,548 0,703 0,534 0,331 0,449 0,432 0,381 6 Long-term unemployment 0,899 0,925 0,752 0,596 0,475 0,372 0,712 1,000 (Source: authors' calculations)