This fact-filled and insightful volume provides a systematic assessment of the welfare consequences of the economic crisis of 2007–09 in Europe. As the editors note at the very outset, the Great Recession was the biggest contraction of the world economy since the Great Depression of the 1930s, yet it did not have nearly as serious a set of economic, social and political consequences as its great predecessor and the postwar expansion of the welfare state is surely one, if not the most important, reason why history did not repeat itself. With the Great Depression lurking in the background as a historical reference point, the volume shows how public welfare provisions as well as fiscal policies cushioned the impact of the recent crisis on income growth and financial hardship across the income distribution. Framed by comparative chapters that present quantitative data for no fewer than thirty countries, the core of the volume consists of case studies analyzing crisis dynamics and their welfare consequences in nine countries: Greece, Spain, Ireland, Iceland, Finland, the UK, Denmark, Norway and Sweden.

One of the volume’s many important contributions is to present a novel measure of financial hardship. Generated by the methodology of latent class analysis, this measure draws on three indicators from the European Union’s Statistics on Income and Living Conditions (EU-SILC). Individuals are said to experience financial hardship when (a) their household income falls below 50% of the median household income, (b) they report difficulties “making ends meet,” and (c) they say that they cannot afford at least two on a list of nine items presented to them by EU-SILC. Not surprisingly, financial hardship measured in this fashion increased in all countries during the crisis and, across countries, financial hardship increased most sharply among low-income households. At the same time, there is considerable cross-national variation in the extent of crisis-induced financial hardship and its durability, as well as in the initial levels recorded before the crisis. As summarized in the final two chapters, the volume convincingly demonstrates that, controlling for the depth of the crisis, the comprehensive and resourceful social protection systems of the Nordic countries and Continental countries performed better than other groups of welfare states in protecting populations against financial hardship (pp. 273–274, 280–281).

The theme of “families of welfare states” features prominently in the framing of the case studies as well as the volume as a whole. Still, it remains somewhat unclear, at least to this reader, how this volume speaks to the long-standing debate between welfare-state scholars who conceive of cross-national variation as a continuum (defined by decommodification, generosity, etc.) and those who emphasize qualitative differences across welfare states (eligibility principles, cash benefits versus services, etc.). While Nordic and Continental welfare states both performed well in protecting against financial hardship, the volume yields little evidence to suggest that the burden of financial hardship was more broadly shared in the Nordic countries than in France, Germany, the Netherlands, Belgium, Switzerland and Austria, as we might have expected based on the comparative welfare-state literature inspired by Esping-Andersen (Reference Esping-Andersen1990). Indeed, the most striking pattern in the data on changes in overall inequality and relative poverty (pp. 37–42) is the growing variation within the Nordic as well as the Continental grouping. Over the period 2007–14, Gini coefficients for disposable household income increased substantially in France, Sweden and Denmark, and to a lesser extent in Germany, while they fell at least as much in Iceland, Finland, the Netherlands and Belgium (and held more or less constant in Austria, Norway and Switzerland).

Iceland emerges as a particularly interesting case given the very sharp contraction of GDP in 2008–09 and the fact that the social insurance provisions of the Icelandic welfare state were less generous than those of other Nordic welfare states at the onset of the crisis. Financial hardship increased less than the contraction of GDP would have led us to expect and was more equally shared than in any of the other countries considered in this volume. As explained in Ólafsson’s chapter on Iceland, the near-universal provision of childcare and the high employment rate among women are an important part of the Icelandic story. Across countries, single-wage-earner households are a lot more vulnerable to financial hardship due to job losses than two-wage-earner households. More interestingly, Iceland stands out as the one case in which austerity measures from 2009 onwards were combined with an aggressive effort to shift the tax burden onto more affluent citizens and to protect spending on programs that primarily benefit low-income households.

With the exception of Iceland, the case studies and comparative discussion of social policy emphasizes stability and path dependence. We are told that not much changed in the domain of social policy during the crisis: the welfare-state story is essentially a story of how the welfare states that were in place when the crisis hit shaped the welfare consequences of the crisis. At the same time, the comparative and country-specific chapters alike emphasize that governments responded differently to the crisis in the broad domain of fiscal policy or, in other words, aggregate demand management, embracing “austerity” to different degrees and pursuing different combinations of tax increases and spending cuts to reduce public debt. These policy responses, we are told, must also be taken into account to understand the consequences of the crisis for financial hardship and its distribution across the population. However, the volume does not shed very much light on the question of what explains divergent fiscal policy choices – for example, the role of government partisanship and EMU membership. More importantly, it invites a more sustained exploration of the relationship (interactions) between “fiscal policy” and “social policy.”

The empirical evidence presented in the comparative chapters brings to the fore an interesting contrast between Southern Europe and Eastern Europe. With the notable exception of Poland, the crisis hit Eastern Europe as hard as it hit Southern Europe, but East European countries – in particular, the Baltic states – recovered far more quickly. As in the Nordic countries, financial hardship actually declined from 2007 to 2015, despite a sharp increase during the crisis itself. While income inequality increased sharply in Estonia from 2007 to 2015, it declined almost as sharply in Latvia. Exploring the reasons for these differences represents an opportunity to advance our understanding of the role of social protection systems and fiscal policy choices in shaping the welfare consequences of the Great Recession. As I am sure the editors would readily concede, it is unfortunate that there is no East European case study in this volume.

While the contrast with the Great Depression serves as an effective framing device, Palme’s chapter on Sweden points to comparisons with more recent crises as another opportunity to advance the research agenda of this volume. For nine OECD countries for which we have data going back to the late 1980s, Pontusson and Weisstanner (Reference Pontusson and Weisstanner2017) demonstrate that redistribution of income among working-age households increased during the Great Recession and its immediate aftermath, but the extent of compensatory redistribution – i.e., the extent to which increases in redistribution offset increases in pre-fisc income inequality – was much less pronounced than in the first half of the 1990s. Tax reforms and, above all, reforms of unemployment insurance and other social protection systems implemented in the 10–15 years preceding the Great Recession appear to have weakened compensatory redistribution mechanisms.

The volume leaves us with a puzzle: it demonstrates that the welfare state saved capitalism from itself and yet neither economic and political elites nor citizens seem particularly grateful. As the introductory and concluding chapters point out, the “neoliberal paradigm” remains dominant among policy-makers and the broader political environment seems to have become more rather than less hostile to political initiatives that would shore up, let alone expand, welfare-state universalism. Recognizing the declining effectiveness of welfare states in counteracting rising inequality since the mid-1990s might be a step towards resolving the puzzle, at least as far as the attitudes of lower- and middle-income citizens are concerned. For ordinary people, the fact that the Great Recession did not lead to financial hardship on the scale of the 1930s is hardly reason to cheer.