The welfare state and the roles of social capital in subjective well-being: The crowding-out and crowding-in arguments revisited

In international comparative research, significant advances have been made in the study of the effect of social capital and the welfare state on subjective well-being (SWB). However, few studies have examined how the welfare state influences the impact of social capital on SWB. To fill this gap, from the perspectives of the crowding-out and crowding-in hypotheses, this study explores whether welfare provisions alter the role of three dimensions of social capital – namely, social trust, formal social contact, and informal social contact, in SWB. The present study utilises international comparative data from nine waves of the European Social Survey of 2002 to 2019 and a two-way fixed-effects model to evaluate the cross-level interaction effects of welfare provisions and the three dimensions of social capital on SWB. This analysis reveals that welfare spending strengthens the positive association between social capital and SWB.