Globalization, Automation, and the Welfare State: Evidence from the OECD and South Korea

Abstract

How do subjective economic threats from globalization and technological changes shape social policy preferences? In this article, we argue that structural economic shifts increase subjective job insecurity. Consequently, individuals are more likely to seek immediate compensation for anticipated income and job losses, leading to a preference for short-term social consumption policies over social investment policies focused on long-term education and skill development. We find strong evidence of the effects of automation threats in the Organization for Economic Co-operation and Development (OECD) Risks that Matter 2020 survey. In addition, an original survey experiment conducted in South Korea shows that globalization threats have an even stronger impact than automation threats on support for social consumption policies. Our study demonstrates that rising economic insecurity, driven by structural changes, is increasing the demand for social consumption policies at the expense of social investment in an era of austerity. This suggests a potential reshuffling of pro-welfare coalitions.