Redistributing under fiscal constraint: partisanship, debt, inequality and labour market regulation

Labour market regulation varies significantly, both within and between developed democracies. While there has been extensive research and debate in economics on the consequences of labour market regulation, the political causes for levels and changes in labour market regulation have received less scholarly attention. This article investigates a political economy explanation for differences in labour market regulation building on a theoretical argument that labour regulation can be used as a nonfiscal redistribution tool. Consequently, partisanship, the demand for redistribution and government budget constraint jointly determine whether labour market regulation will increase or decrease. Consistent with this argument, panel analyses from 33 Organisation for Economic Co-Operation and Development countries reveal that labour market regulation increases under left-wing governments that face increased market inequality and high government debt

Changes in union membership over time : a panel analysis for West Germany

Despite the apparent stability of the wage bargaining institutions in West Germany, aggregate union membership has been declining dramatically since the early 90's. However, aggregate gross membership numbers do not distinguish by employment status and it is impossible to disaggregate these sufficiently. This paper uses four waves of the German Socioeconomic Panel in 1985, 1989, 1993, and 1998 to perform a panel analysis of net union membership among employees. We estimate a correlated random effects probit model suggested in Chamberlain (1984) to take proper account of individual specfic effects. Our results suggest that at the individual level the propensity to be a union member has not changed considerably over time. Thus, the aggregate decline in membership is due to composition effects. We also use the estimates to predict net union density at the industry level based on the IAB employment subsample for the time period 1985 to 1997. JEL - Klassifikation: J

Muting Science: Input Overload Versus Scientific Advice in Swiss Policy Making During the Covid‐19 Pandemic

This article explores why the Swiss Federal Council and the Swiss Federal Parliament were reluctant to follow the majority views of the scientific epidemiological community at the beginning of the second wave of the Covid-19 pandemic. We propose an institutionalist take on this question and argue that one major explanation could be the input overload that is characteristic of the Swiss federal political system. We define input overload as the simultaneous inputs of corporatist, pluralist, federalist and direct democratic subsystems. Adding another major input—this time from the scientific subsystem—may have threatened to further erode the government's and parliament's discretionary power to cope with the pandemic. We assume that the federal government reduced its input overload by fending off scientific advice

Redistributive preferences: Why actual income is ultimately more important than perceived income

An emerging consensus claims that ‘subjective’ (mis)perceptions of income inequality better explain redistributive preferences than actual ‘objective’ conditions. In this article, we critically re-assess this view. We compare perceived and actual income positions as predictors for preferences for redistribution. We argue that perceived income is partly endogenous to actual income and its effect on preferences conditional on ideology. Using an original survey experiment from Switzerland, we show that the predictive power of perceived income is lower compared to actual income. Perceived income is only associated with redistribution preferences among centre-right respondents, but not among left-wing respondents. Furthermore, providing respondents with corrective information about their true position in the income hierarchy has no effect on redistribution preferences. These findings go against the new consensus about the superior explanatory power of subjective perceptions of income inequality. We argue instead that absolute objective conditions should be at the centre of explaining redistributive preferences

How redistributive policies reduce market inequality: education premiums in 22 OECD countries

What explains the large cross-country variation in the wage premium for higher education? Economic analyses of wage differentials by education point to technological change and globalization, but we know little about the impact of different types of public policies. We argue that public education spending and tax-transfer policies contain the spread of ‘education premiums’ through material incentives (decommodification) and attitudinal responses, i.e. changing attitudes towards education premiums and the motivation to request a maximum return on individual investment in education. The empirical analysis relies on a new dataset of education premiums constructed from Luxembourg Income Study surveys, covering 22 OECD countries between 1989 and 2014. We provide evidence that taxation levels and public education spending particularly affect education premium levels and changes within countries. For the literature on income inequality, these findings imply the need to pay attention more systematically to redistributive policies shaping the ‘market’ distribution of incomes

Two decades of change in Europe: The emergence of the social investment state

Since the late 1970s, the developed welfare states of the European Union have been recasting the policy mix on which their systems of social protection were built. They have adopted a new policy orthodoxy that could be summarised as the 'social investment strategy'. Here we trace its origins and major developments. The shift is characterised by a move away from passive transfers and towards the maximalisation of employability and employment, but there are significant national distinctions and regime specific trajectories. We discuss some caveats, focusing on the question whether the new policy paradigm has been established at the expense of social policies that mitigate poverty and inequality. © 2012 Cambridge University Press

Austerity and Adjustment from the Great Recession to the Pandemic— and Beyond

In 2010–2015 almost all democratic countries pursued austerity. Then countries exited austerity, although following different paths. The onset of the pandemic brought about a hike in public spending to cope with its social and economic consequences that does, however, plant the seeds of future economic adjustments. In this chapter we study the political strategies and options of governments during austerity periods using a new dataset for 30 democratic nations, from 2010 to 2019. We ask where and when democratic politics mattered for austerity policies from the Great Recession to the Covid-19 pandemic. Our main finding is that austerity policies were mostly driven by economic forces. Focusing on the process of exiting austerity, we show that such policies cannot be sufficiently explained by changed economic fundamentals. Rather, the longer governments pursue austerity the more likely they are to exit it, even if the economic fundamentals do not support it

Neil A. Armingeon

Neil A. Armingeon, St. Johns Riverkeeper (at the time of the interview), interviewed by Katie Tofano on October 22, and November 18, 2010

The Eurotower Strikes Back

The 2008 global financial crisis came with fears—and, for some, hopes—that a new wave of public mobilization would emerge in industrialized countries. Especially throughout the European Union (EU), the epicenter of the crisis, large protests were expected. Yet, the energy with which social groups mobilized against the proposed austerity measures quickly fizzled. This article provides new evidence for why this was the case. In line with Neo-Keynesian theory, we argue that the interest rate adjustments and political announcements of the European Central Bank (ECB) limited the potential for mass unrest in the member states of the Economic and Monetary Union (EMU) affected by the crisis. We provide evidence for our argument with yearly panel data and a new original data set of monthly political protests between 2001 and 2013. Our analyses support the hypothesis that the ECB was able to successfully assuage dissatisfaction with the limited reform options of the Eurozone member states in the wake of the Eurocrisis