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Oxford Review of Economic Policy 2006 22(3):426-444; doi:10.1093/oxrep/grj025
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Oxford Review of Economic Policy vol. 22 no. 3 2006 © The Authors (2006). Published by Oxford University Press. All rights reserved.

Welfare-State Retrenchment: The Partisan Effect Revisited

Bruno Amable
University of Paris I and CEPREMAP

Donatella Gatti
University of Paris XIII, CEPREMAP, and IZA

Jan Schumacher
University of Regensburg1

Abstract

This paper aims to shed light on the role of the ‘ideology’ of political parties in shaping the evolution of the welfare state in 18 developed democracies, by providing empirical findings on the determinants of social-programme entitlements and social spending over the period 1981–99. The paper shows that structural change is a major determinant of the extent of social protection. Our results suggest that overall spending is driven up by structural change. On the other hand, strong structural change has a negative influence on welfare entitlements measured by the net rate of sickness insurance. Partisan influence plays an important role in the dynamics of the welfare state. Left-wing governments strengthen the positive effect of shocks on aggregate social expenditure, while right-wing governments undertake even stronger cutbacks in replacement rates as a reaction to structural change.

Footnotes

1 E-mail addresses: bruno.amable{at}ens.fr; donatella.gatti{at}cepremap.cnrs.fr; jan.schumacher{at}wiwi.uni-regensburg.de


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