The reform of the Dutch welfare state is an ongoing process, that jumpstarted in the early 1980s. We chart demographic trends and prospects for economic growth up to year 2025. Our search for options to strenghten the economic base of the welfare state leads on to a discussion of tax-benefit measures to increase labour participation and to incentivise part-timeworkers to accept fulltime jobs. We conclude that, all in all, by 2025 the number of workers in de Dutch economy will not differ significantly from the current size of the labour force, whereas the scope to improve labour productivity seems to be limited. Given these limits to the prospects for future economic growth – even with the standard pension age at 67 years, planned to be in force as from 2021 –, our economy will have to support at least half a million more pensioners and an as yet unknown additional number of elderly unemployed and disabled. It follows, that further reforms of the social security system of the Netherlands can be expected, as public sector outlays claim currently already half of national output.

The key question of this study is whether policies adopted elsewhere in Europe might be useful in helping to increase the labour force participation of women and of older workers in the Netherlands, and thus improve the financial basis for social security arrangements. We examined the effectiveness of national policy measures over and above that of the individual-level determinants that are traditionally examined in economic and sociological studies. The data on labour force participation are from the European Social Survey, and information on public policy arrangements comes from the MULTILINKS database. Regarding the labour force participation of women, findings show the importance of distinguishing financial measures and care services. Women generally work fewer hours per week in countries with generous financial support for families (tax benefits, child support), and more hours in countries with generous parental leaves. Regarding the participation of older workers, findings show the importance of distinguishing the minimum pension level (negative association with the likelihood of having a job) and pension as a proportion of earned wage (no association with having a job). A novelty of the present study is its ability to demonstrate the impact of national arrangements at the level of individual participation behaviour.