Political parties, institutions, and the dynamics of social expenditure in times of austerity

Abstract

The containment of social expenditure growth has been (and still is) a core issue of public policy in advanced industrial countries since the 1980s and has received much academic attention during that period. Among the most extensively discussed explanatory factors of social expenditure are partisan politics and political institutions, as well as the dependency of the real impact of the former on the latter. The paper distinguishes five competing theoretical perspectives and explores their power to explain the empirical variation in the period 1982-1997 in 21 OECD countries. The empirical analysis of short-term dynamics is performed in a time-series cross-section framework while long-term level effects are explored in a cross-sectional setting. By using an interactive model specification the authors show that there is empirical evidence for this conditional effect, albeit it is neither thoroughly convincing nor leading to lasting long-term level effects. Extensive specification tests show that the 1990s witnessed a weakening of partisan effects which were still present in the 1980s. In total, the evidence tends to give most support to the "growth-to-limits" and the "new politics" perspectives.

Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis

“…A rising unemployment rate is likely to increase social spending (Snyder and Yackovlev 2000;Kittel and Obinger 2003;Avelino et al 2005). Avelino et al (2005) argue that even if there are few unemployment programs in Latin America, there should be a positive relationship between unemployment and social spending, due to governments' efforts to counteract the negative effects of any crisis and to promote employment generation.…”

“…Studies on the determinants of social spending have increased since the late 1970s, coinciding with the implementation of social policy reforms carried out in developed countries to strengthen their welfare states (Kittel and Obinger 2003). Several determinants of social spending were considered, such as the ideological orientation of governments, integration into global markets or the degree of fiscal decentralisation.…”

Making a Market out of a Welfare State: Swedish Local Politicians’ Perspectives on Elderly Care Marketisation

“…This new politics of welfare has been accepted by many researchers (Busemeyer 2009;Castles 2007;Huber and Stephens 2001;Kittel and Obinger 2003;Zohlnhöfer et al 2008). For instance, Schneider, Fink, and Tenbücken (2005) studied the changes in the shares held by the government of the dominant provider in three infrastructure sectors (telecommunications, electricity, and aviation sectors) between 1970 and 2000, and they found that partisan differences seen in the 1980s disappeared in the 1990s.…”

“…Contrary to the difference thesis, the convergence theory claims that partisan politics have converged as a result of either structural changes such as ageing or free movement of labour and economic resources, globalisation, and ideational reasons (Huber and Stephens 2001;Kittel and Obinger 2003;Pierson 2001). …”

“…Among studies that focus on politicians, it is notable that political preferences have typically been studied on a more aggregated level; for instance, how political parties adopt various market reforms under fiscal stress (Kittel and Obinger 2003;Klitgaard and ElmelundPraestekae 2014) to either align with their political ideology or to meet the needs of the program constituency as median voters (Elinder and Jordahl 2013;Kang and Powell 2010;Pierson 1994Pierson , 1996Zehavi 2012).…”