The Golden Age of post‐war capitalism has been eclipsed, and with it seemingly also the possibility of harmonizing equality and welfare with efficiency and jobs. Most analyses believe that the emerging post‐industrial society is overdetermined by massive, convergent forces, such as tertiarization, new technologies, or globalization, all conspiring to make welfare states unsustainable in the future. This book takes a second, more sociological and institutional look at the driving forces of economic transformation. What stands out as a result is that there is post‐industrial diversity rather than convergence. Macroscopic, global trends are undoubtedly powerful, yet their influence is easily rivalled by domestic institutional traditions, by the kind of welfare regime that, some generations ago, was put in place. It is, however, especially the family economy that holds the key as to what kind of post‐industrial model will emerge, and to how evolving trade‐offs will be managed. Twentieth‐century economic analysis depended on a set of sociological assumptions that now are invalid. Hence, to grasp better what drives today's economy, it is necessary to begin with its social foundations. After an Introduction, the book is arranged in three parts: I, Varieties of Welfare Capitalism (four chapters); II, The New Political Economy (two chapters); and III, Welfare Capitalism Recast? (two chapters).

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Two dominant theories within family research foresee a long‐term decline in marriage, fertility, and partner stability. They also assume that this “less‐family” scenario will be spearheaded by higher‐educated strata. Trends in the latter half of the twentieth century seemed to provide ample support for both predictions. However, recent signs of change in family behavior raise doubts about their continued validity. In a number of countries we see a halt to, and even reversal of, fertility decline and of couple instability. In parallel, we observe a reversal of the social gradient on both dimensions. Applying a multiple equilibrium framework, we propose a theoretical framework that helps explain both the phase of marital and fertility decline and the subsequent recovery. We focus especially on the endogenous dynamics of the process, which, we argue, depend on the conditions that favor rapid diffusion. Our core argument is that the turnaround is driven by the diffusion of gender‐egalitarian norms.

The introduction to this chapter considers the paradox that now that European society is ageing, it is becoming quite urgent that more is invested in the welfare of children, in contrast to the situation in the post‐war decades, when Europe was youthful and welfare policies came to focus on the elderly. An examination is then made of how welfare risks concentrate across households, focusing both on families with children generally, and on high‐risk lone parent and work‐poor households in particular. Next, the impact of family welfare on citizens’ life chances, particularly during early childhood, is addressed. Women's paid employment emerges as a key ingredient in any strategy to combat poverty in families with children, and it is noted that this calls for a much more concerted strategy of equalizing women's opportunities (discussed in the next chapter). It is nonetheless vital that any sustainable and effective policy for combating social exclusion must combine child‐, family‐, and women‐friendly policies within an integrated strategy, on which the social quality and economic efficiency of twenty‐first‐century Europe will largely depend.

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