Revisiting the effectiveness of the employment‐oriented welfare state: Considering the quality of employment achievement

The purpose of this study was to examine the effectiveness of an employment‐oriented welfare state. While previous studies have focused on employment growth, this study considers the quality of employment, especially its mediating impact between public social expenditure and fiscal soundness. Three‐step mediated regression analysis was conducted on a data sample from 19 developed countries from 1991 to 2013. The results show that while public social expenditure negatively affects fiscal soundness, if it promotes total and part‐time employment, it can positively affect fiscal soundness. However, when the incidence of involuntary part‐time employment is high, public social expenditure and its impact on employment performance no longer guarantee fiscal soundness. This study addresses the importance of promoting not only employment growth but also employment quality to secure fiscal soundness.