EU member states in Central and Eastern Europe experienced high levels of emigration after joining the EU. New research from Melle Scholten shows that while this has resulted in fewer working-age citizens to support retirees, public healthcare spending has increased for political reasons.
It is well known that membership of the European Union fundamentally changes the socioeconomic and political trajectories of its new member states. By the time the former communist countries in Central and Eastern Europe joined the EU, they had already transformed their political systems to adhere to the Copenhagen Criteria.
Access to the EU’s common market subsequently enabled economic growth in Central and Eastern Europe, but also introduced new fault lines between younger, more highly educated individuals for whom the common market meant new opportunities to live and work abroad, and those who lacked the ability to seek employment elsewhere or were already retired.
This issue is a pressing one for the region: in surveys of citizens in Central and Eastern Europe, emigration generally ranks higher as a societal concern than immigration, despite the latter’s politicisation at the European level. Previous research has also found that emigration and its consequences are drivers of far-right populism and illiberal attitudes in the region, suggesting that the process of European integration could be self-defeating due to its attitudinal effects.
Has emigration led to welfare cuts?
In a new study, I investigate the consequences of EU accession in Central and Eastern European states on several political-economic indicators, including elderly dependency ratios, public and private welfare spending and incumbency survival rates.
Using a statistical technique that allows for causal interpretation (and testing extensively for its robustness), I find that membership of the EU increases the ratio of retirees to the overall labour force in the country. It would be logical to assume that this situation puts significant strain on national public welfare systems, as there are fewer working-age people left to support the same number of retirees.
This raises the question of whether Central and Eastern European states have reduced welfare spending in response. I find that this is generally not the case. Rather than diminish spending on public healthcare, I find that new EU members in the region increased spending on public healthcare, which disproportionately benefits the elderly.
I account for general retrenchment of the welfare state in the region by comparing the trajectories of Central and Eastern European EU member states with those of Central and Eastern European countries that are at different stages of negotiating EU accession. The explanation for this intriguing finding is political pressure. When there are more elderly individuals left in a country relative to working-age individuals, this affects not only the country’s economic demography but also its political demography.
As expatriate voter turnout is much lower than domestic voter turnout, incumbent, re-election-oriented governments have a strong incentive to prioritise the policy preferences of those who have stayed behind over those who have left. And if those who stayed behind prefer keeping public health expenditures high, because they benefit disproportionately from this, then spending will remain high, regardless of the long-term fiscal sustainability of such policies.
Alternative explanations
There are various alternative explanations that could be proposed for the above findings. For instance, joining the EU led to economic growth in new members relative to non-members. Higher spending in new EU members might have occurred simply because their economies expanded faster than non-members, freeing up resources to be used for public goods.
Yet if this is true, we should expect to see both public and private healthcare spending trends increase after accession. This is not what I find. Private healthcare expenditure trends show no divergence, even as public expenditure on healthcare goes up. This suggests that increased public welfare spending in Central and Eastern Europe is a deliberate, political choice aimed at winning electoral support from a welfare dependent coalition that has suddenly become more electorally salient.
I also estimate whether increased healthcare expenditures indeed benefit incumbent governments politically, and whether increased expenditure improves government evaluations among the elderly. For both, I find that this is indeed the case. Governments that spend more on public healthcare stay in power longer and enjoy more positive evaluations from their elderly citizens, on average. I also find that it is specifically spending on healthcare that leads to improved government evaluations among this group. Taking all public social expenditures as the explanatory variable instead yields no significant results.
While demographic changes and ageing populations are hardly unique to Central and Eastern Europe, what is of particular importance in this case is that these shifts are fundamentally political in origin through the role of emigration. Furthermore, this shift has profound consequences for democratic competition in these countries. While EU membership was seen for a long time as a positive for democratisation and governance, my findings show membership can also have problematic implications for democracy.
Open questions
It is important to emphasise that neither migration nor public welfare are inherently “bad” things. While there may have been aggregate negative effects for Central and Eastern European states due to emigration, those who could migrate have benefitted tremendously. Higher wages, social justice for marginalised sexual and gender identities, and access to prestigious institutions of higher education are all great individual benefits for people who can move. Similarly, there’s nothing inherently malicious about providing benefits to the elderly and infirm from public spending.
But my findings underline the need to rethink state-society relations in the context of European integration and high migration rates. For instance, what obligations does an individual have to their home country and their host country? What meaning does citizenship – a concept fundamentally rooted in a bordered understanding of the world – have in a polity where borders are highly porous? Is it a good or a bad thing that expatriate voter turnout is so low?
On the one hand, expatriate citizens are still citizens, with rights and obligations vis-à-vis their country of origin. But on the other, those not residing in the state are much less affected by its public policies, and this might provide an argument for why expatriate voting could be problematic (I thank Piero Stanig for raising this point).
These are open questions, which require scholarly, societal and political input. A fruitful discussion on these questions ought to be informed by empirical data, and knowledge on the consequences of different policy decisions. I am glad that my work may have contributed to this important question in some small way.
For more information, see the author’s accompanying paper in European Union Politics.
Note: This article gives the views of the author, not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured image credit: Eduardo Regueiro / Shutterstock.com
