How to Invest, in Whom and for What Ends? the Politics of Social Investment Reforms in Israel 1990-2017

Social Investment (SI) emphasizes the future economic benefits of early and ongoing investment in human capital, and active inclusion via labor market integration. However, even if embraced wholeheartedly, the context of austerity coerce policymakers to decide how to invest scarce resources: what groups to target and which policy instruments to use. Recent studies explore the role of coalitions in the production of distinct SI strategies focusing on, first, the translation of international SI ideas to domestic policy agendas, and second, the politics of SI policies, where actors struggle to define and advance SI policies with different distributional outcomes. This paper focuses on the Israeli case, where SI ideas were introduced and used to advance and shape social policy reforms since the late 1990s. Although Israel is lacking a coherent and persistent SI agenda, it is possible to identify two different SI policy agendas that were advanced by competing coalitions. The first, headed by fiscal bureaucrats from the Ministry of Finance, prioritized short-term budget constraining goals and frequently truncated SI initiatives, particularly those with universal aims. At the MoF, SI was not perceived as instrumental for economic growth. A second coalition was headed by monetary bureaucrats from the Central Bank since the early 2000s, actively calling to breach fiscal constraints and increase social investment in early education, skill formation, and the integration of disadvantaged populations into the labor market. The paper analyzes the role of both coalitions in the politics and outcomes of SI policy reform (1999-2017). In Israel, political cleavages and policy legacies are politicizing social investment in specific un- and underemployed disadvantaged populations. In the context of austere social spending control, I focus on successful SI reforms and ask what political conditions and strategies made these reforms successful, which populations benefited from them, and how SI policies were designed?