Book

Digitalisation and European welfare states

EU policymakers must find answers to pressing questions: if technology has a negative impact on labour income, how will the welfare state be funded? H

Publishing date
09 July 2019

Rapid technological progress and innovation can destroy jobs and disrupt welfare systems. This is not a new concern. Historically, automation of production processes has led to extraordinary efficiency gains and to the displacement of labour. But history has also shown that, in the longer run, the gains in efficiency pay off and new jobs are created.

But the past is not necessarily a guide to the future. Currently, an unprecedented digitalisation of our economy is underway. Artificial intelligence has become a reality and machines are able learn how to outperform humans in some cognitive tasks. The way work is performed is also changing, with jobs allocated via online platforms and people matched to tasks in a way that means they are neither full-time employees, nor self-employed workers in the traditional sense.

For welfare systems, which are largely funded by taxes on employment, these changes have significant implications. One of the big challenges of the twenty-first century will be to redefine the nature and functioning of welfare states in the context of the fundamental changes brought about by digitalisation, artificial intelligence and the changing status of workers. If technology has a negative impact on labour income, how will the welfare state be funded? How can workers’ welfare rights be secured?

This volumes tackles these questions and provides recommendations to inform the discussion in the European Union.

This report was produced with the financial support of the Mastercard Center for Inclusive Growth.

About the authors

  • Scott Marcus

    J. Scott Marcus is a Senior Fellow at Bruegel, a Brussels-based economics think tank, and also works as an independent consultant dealing with policy and regulatory policy regarding electronic communications. His work is interdisciplinary and entails economics, political science / public administration, policy analysis, and engineering.

    From 2005 to 2015, he served as a Director for WIK-Consult GmbH (the consulting arm of the WIK, a German research institute in regulatory economics for network industries). From 2001 to 2005, he served as Senior Advisor for Internet Technology for the United States Federal Communications Commission (FCC), as a peer to the Chief Economist and Chief Technologist. In 2004, the FCC seconded Mr. Marcus to the European Commission (to what was then DG INFSO) under a grant from the German Marshall Fund of the United States. Prior to working for the FCC, he was the Chief Technology Officer (CTO) of Genuity, Inc. (GTE Internetworking), one of the world's largest backbone internet service providers.

    Mr. Marcus is a member of the Scientific Committee of the Communications and Media program at the Florence School of Regulation (FSR), a unit of the European University Institute (EUI). He is also a Fellow of GLOCOM (the Center for Global Communications, a research institute of the International University of Japan). He is a Senior Member of the IEEE; has served as co-editor for public policy and regulation for IEEE Communications Magazine; served on the Meetings and Conference Board of the IEEE Communications Society from 2001 through 2005; and was Vice Chair and then Acting Chair of IEEE CNOM. He served on the board of the American Registry of Internet Numbers (ARIN) from 2000 to 2002.

    Marcus is the author of numerous papers, a book on data network design. He either led or served as first author for numerous studies for the European Parliament, the European Commission, and national governments and regulatory authorities around the world.

    Marcus holds a B.A. in Political Science (Public Administration) from the City College of New York (CCNY), and an M.S. from the School of Engineering, Columbia University.

  • Georgios Petropoulos

    Georgios Petropoulos joined Bruegel as a visiting fellow in November 2015, and he has been a resident fellow since April 2016. Since March 2022, he has been a non-resident fellow. Since March 2019, he is a Marie Curie Skłodowska Research Fellow at MIT and Bruegel and post-doctoral fellow at the MIT Initiative on the Digital Economy. Georgios’ research focuses on the implications of digital technologies on innovation, competition policy and labour markets. He is currently studying how we should regulate digital platforms, what the relationship between big data and market competition is as well as how the adoption of robots and information technologies affect labour markets and firms’ market returns. He holds a bachelors degree in Physics, master’s degrees in mathematical economics and econometrics and a PhD degree in Economics. He has also studied Astrophysics at a Master's level.

  • Nicolas Moës

    Nicolas Moës, a Belgian citizen, works as a Research Assistant in the Innovation & Competition Policy area. He holds a B.Sc. in Economics and Business Economics from Maastricht University and a M.Phil. in Economics from the University of Oxford. His master thesis focused on developing analytical solutions for collective action problems, bridging the gap between the institutional economics literature and neoclassical approaches.

    Alongside his studies, he did an internship in strategy consulting at Bain & Company and another one at a UK policy institute, developing policy recommendations for the international governance of global risks. He also founded the student NGO Economists Without Borders while in Oxford.

    Nicolas' research interests include theoretical and empirical microeconomics, notably institutional economics, innovation policy, and the impact of technology on the labor markets.He is a native French-speaker, fluent in English and persists in learning Dutch and Mandarin.

  • Enrico Bergamini

    Enrico worked at Bruegel as a research analyst.

    He is currently pursuing a PhD in Economics and Complexity at the University of Turin. He holds a BSc in Business and Economics from the University of Bologna and a MSc in Economic Policy from the University of Utrecht.

    His research interests include economics of innovation, climate change, and inequalities.

    Enrico is a native Italian speaker, is fluent in English and has a working knowledge of French.

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