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The purpose of this paper is to compare the impact of two social investment strategies (labour activation and governance coordination) targeted to social assistance clients within three different welfare-system coordination cases, with focus on social and economic inclusion.

The authors focus on the impact of reform at micro (individually experienced impact), meso (impact across settings) and macro (socio-structural impact) levels.

While social investment reform has given some clients new opportunities, in no study case were clients fully able to use the incentive-driven strategies. Reforms have led to a “Matthew effect”: the better resourced reap the largest benefit from new services on offer while the less resourced have their marginal socioeconomic position reinforced. Clients may internalise their relative activation success. Intimate connections between macro- and micro-impacts may have heightened the sense of social and economic exclusion, stigma and shame experienced by those who are most vulnerable.

Social investment reform (labour activation) may not be a model that reduces social and economic exclusion and it may, instead, reify socioeconomic marginalisation, enhancing sense of stigma and shame and reducing self-efficacy.

Scholars have assessed social investment according to its economic performance, but there has been a lack of research considering impact of reform on socioeconomic inclusion.