Globalization and Welfare Compensation: Disentangling the Ties that Bind

Abstract

Three perspectives dominate debate over the relationship between globalization and the welfare state in industrialized countries: that globalization constrains the welfare that hitherto legitimated openness, that globalization still sparks demands for welfare while opening few forces to flee or fight against it, and that openness has little effect on welfare. A closer look at the “globalization” and “welfare” aggregates on which most scholars focus, however, reveals varying politics connecting different elements of globalization and welfare that may help reconcile this debate. First, compared to general trade openness, low-wage competition may spark stronger pressure to expand and less pressure to constrain welfare compensation. Second, all kinds of openness affect vulnerable and thriving groups in ways that differ across social policies, especially training and relocation benefits compared to benefits for youth dependents and the elderly. Consequently, different faces of openness may spark predictably different politics that spur some aspects of welfare, retrench others, and have little effect on still others. Panel data for eighteen OECD countries supports this argument.

Taking the Sector Seriously: Data, Developments, and Drivers of Intrasectoral Earnings Inequality

“…When we focus the analysis on trade with less developed countriesrather than the sectoral exposure to international trade in general-we find a positive association between trade and earnings inequality. This is in line with the argument that when developed countries engage into trade with less developed countries, mainly the lowskilled employees suffer from the increased competition (e.g., Burgoon 2001;Thewissen and Van Vliet 2015). As such, these findings are in line with and complement the findings of other sectoral studies on earnings inequality that only include two time periods and focus on particular determinants of earnings inequality (Mahler et al 1999;OECD 2011a;Michaels et al 2014).…”

“…In contrast, the Stolper- Samuelson model (1941) predicts that when countries engage into trade, the production factors that are relatively abundant gain. In developed countries, where high-skilled workers are relatively more abundant, engaging into trade will lead to a higher skill demand, whilst the lowskilled will suffer from the increased competition with developing countries with a relative abundance of low-skilled labour (Burgoon 2001). Hence, the hypothesis to be tested is that sectors more exposed to international trade experience higher levels of earnings inequality.…”

Welfare Chauvinism? Refugee Flows and Electoral Support for Populist-Right Parties in Industrial Democracies

“…According to the self-interest based rational choice theory, citizens experiencing a decline in standard of living will be more supportive of redistribution and big government because they benefit from it (Downs 1957). For instance, Meinhard and Potrafke (2012), , Burgoon (2001), Hicks and Swank (1992) find support for the presence of compensation thesis.…”

Oil, Natural Gas, and Intrastate Conflict: Does Ownership Matter?

“…To account for income effects and Wagner's Law, GDP per capita (purchasing power parity [PPP] converted from the Penn World Table) was included in the models. Since economic growth may have a countercyclical effect on spending (for example, Burgoon 2001) and, at the same time, may raise the revenue base of the welfare state, this variable was also included. 27 Trade openness (measured by the sum of total exports and imports divided by the GDP in constant prices) was considered in order to address previous findings of the so-called compensation theory (see Rodrik 1997).…”