Independent policy learning: Contextual diffusion of active labour market policies

This chapter analyses in which ways diffusion based on interdependent policy learning explains the spread of active labour market policies (ALMP) in the OECD countries. By applying error correction models using multiplicative spatial Prais-Winsten regressions for analyzing the diffusion of ALMPs in 22 OECD countries from 1991–2013, we find evidence of governments adapting labour market policy strategies that have proven successful, that is, perform well in increasing labour market participation in other countries. However, interdependent learning is conditional on the institutional framework: policymakers rather learn from the experience of other countries in the same welfare regime. Even more importantly, the results bear witness to the importance of the European Employment Strategy (EES) as an international coordination framework facilitating policy learning

Grey power and the economy: ageing and inflation across advanced economies

What explains the cross-national variation in inflation rates across countries? In contrast to most literature, which emphasises the role of ideas and institutions, this paper focuses on electoral politics and argues that ageing leads to lower inflation rates. Countries with a larger share of elderly exhibit lower inflation because older people are both more inflation averse and politically powerful, forcing parties seeking their votes to pursue lower inflation. Logistic regression analyses of survey data confirm that (1) older people are more inflation averse and (2) more likely to punish incumbents for inflation. Panel data regression analysis shows that (3) social democratic parties have more economically orthodoxy manifestos in European countries with more elderly people and that (4) the share of elderly is negatively correlated with inflation in both a sample of 21 OECD economies and a larger sample of 175 countries. Ageing therefore pushes governments to pursue lower inflation

Coordination, inclusiveness and wage inequality between median- and bottom-income workers

What explains cross-national variation in wage inequality? Research in comparative political economy stresses the importance of the welfare state and wage coordination in reducing not only disposable income inequality but also gross earnings inequality. However, the cross-national variation in gross earnings inequality between median- and low-income workers is at odds with this conventional wisdom: the German coordinated market economy is now more unequal in this type of inequality than the United Kingdom, a liberal market economy. To solve this puzzle, I argue that non-inclusive coordination benefits median but not bottom-income workers and is as a result associated with higher - rather than lower - wage inequality. I find support for this argument using a large N quantitative analysis of wage inequality in a panel of Western European countries. Results are robust to the inclusion of numerous controls, country fixed effects, and also hold in a larger sample of OECD countries. Taken together these findings force us to reconsider the relationship between coordination and wage inequality at the bottom of the income distribution

The political consequences of labor market dualization: Labor market status, occupational unemployment and policy preferences

This article explores empirically how different types of labor market inequality affect policy preferences in post-industrial societies. I argue that the two main conceptualizations of labor market vulnerability identified in the insider–outsider literature are complementary: labor market risks are shaped by both labor market status—whether an individual is unemployed, in a temporary or permanent contract—and occupational unemployment—whether an individual is in an occupation with high or low unemployment. As a result, both status and occupation are important determinants of individual labor market policy preferences. In this paper, I first briefly conceptualize the link between labor market divides, risks and policy preferences, and then use cross-national survey data to investigate the determinants of preferences

Grey power and the economy: aging and inflation across advanced economies

What explains the cross-national variation in inflation rates across countries? In contrast to most literature, which emphasizes the role of ideas and institutions, this article focuses on electoral politics and argues that aging leads to lower inflation rates. Countries with a larger share of elderly exhibit lower inflation because older people are both more inflation averse and politically powerful, forcing parties seeking their votes to pursue lower inflation. Logistic regression analysis of survey data confirms that older people are more inflation averse and more likely to punish incumbents at the ballot box for inflation. Panel data regression analysis shows that social democratic parties have more economically orthodox manifestos in European countries with more elderly people, and that the share of elderly is negatively correlated with inflation in both a sample of 21 advanced economies and a larger sample of 175 countries. Aging therefore pushes governments to pursue lower inflation

The political consequences of labor market dualization: Labor market status, occupational unemployment and policy preferences

This article explores empirically how different types of labor market inequality affect policy preferences in post-industrial societies. I argue that the two main conceptualizations of labor market vulnerability identified in the insider–outsider literature are complementary: labor market risks are shaped by both labor market status—whether an individual is unemployed, in a temporary or permanent contract—and occupational unemployment—whether an individual is in an occupation with high or low unemployment. As a result, both status and occupation are important determinants of individual labor market policy preferences. In this paper, I first briefly conceptualize the link between labor market divides, risks and policy preferences, and then use cross-national survey data to investigate the determinants of preferences

The political economy of individual level support for the basic income in Europe

There is a long-standing debate in academic and policy making circles about the normative merits and economic effects of a Universal Basic Income (UBI). However, existing literature does not sufficiently address the question of the factors associated with individual support for a UBI. While a large literature in political economy has focused on individual preferences for existing welfare state benefits, it has not analysed the case of a UBI. Using the eighth wave of the European Social Survey (ESS), this article seeks to remedy this gap by analysing individual support for a UBI in 21 European countries. The findings from logistic regression analyses with country fixed effects are partly consistent with the expectations of previous social policy and political economy literatures. Younger, low-income, left-leaning individuals and the unemployed are more likely to support a UBI. Individuals with positive views of benefit recipients, and/or high trust in political institutions are also more supportive, while anti-immigration attitudes are associated with lower support. However, the patterns across occupations is mixed and male respondents appear slightly more supportive. Trade union membership is not statistically significant, perhaps because of contradictory effects: unions typically support new welfare state policies but they also have a key role in many existing welfare state schemes and may worry about individuals’ attachment to the labour market. At the country level, support tends to be higher where activation is more pronounced and unemployment benefits less generous. These results suggest one possible reason why countries with large support for a UBI have not introduced it: the mixed support among the Left means a pro- UBI coalition has to draw on right-wing voters who may support it only with lower taxes and/or extensive replacement of welfare state benefits, which in turn may further alienate parts of the Left

Coordination, inclusiveness and wage inequality between median- and bottom-income workers

What explains cross-national variation in wage inequality? Research in comparative political economy stresses the importance of the welfare state and wage coordination in reducing not only disposable income inequality but also gross earnings inequality. However, the cross-national variation in gross earnings inequality between median- and low-income workers is at odds with this conventional wisdom: the German coordinated market economy is now more unequal in this type of inequality than the United Kingdom, a liberal market economy. To solve this puzzle, I argue that non-inclusive coordination benefits median but not bottom-income workers and is as a result associated with higher - rather than lower - wage inequality. I find support for this argument using a large N quantitative analysis of wage inequality in a panel of Western European countries. Results are robust to the inclusion of numerous controls, country fixed effects, and also hold in a larger sample of OECD countries. Taken together these findings force us to reconsider the relationship between coordination and wage inequality at the bottom of the income distribution

The politics of disinflation

What explains the shift from the moderate to high inflation rates of the Golden Age of post -war capitalism to the low inflation regime of monetarism in the 1970s and 1980s? Conventional views emphasise the rise of monetarism as a new economic paradigm that convinced policy makers to delegate monetary policy to conservative and independent central banks – a view that comes in many variants, from constructivist to orthodox economics. In contrast to these arguments, we introduce electoral and party politics into the debate. This paper models and examines the shifts in the inflationary preferences of the median voter and their translation into party politics and economic policies. As the median voter accumulates nominal assets against a background of de facto and de jure increasing job security and rising wages, her preferences on macro-economic policies shift from concerns about employment-friendly to inflation-averse policies. Social democratic parties, who are pivotal players in this regard because of their ‘natural’ preference for high employment over low inflation, are thus forced to adopt anti-inflation policies as well to remain electorally viable. We show that the employment situation of the average worker improved in every respect during the 1960s and 1970s, that most of the population became inflation averse during the 1970s and 1980s, and that social democratic parties were forced to adopt more economically orthodox party manifestos. We then analyse the shift to a low inflation regime in a series of country case studies