The constrained left and its adverse impact on losers of globalization

'Diese Studie analysiert Arbeitsmarktreformen in Deutschland und Irland, zwei Ländern, welche unterschiedliche politische und institutionelle Zwänge aufweisen. Untersucht wird, wie sich der gemeinsame Effekt des institutionellen Gefüges und der Regierungsideologie auf die Gestaltung der Arbeitsmarktpolitik auswirkt. Die Fallstudien zeigen, dass linke Regierungen in Ländern mit hohen institutionellen Zwängen mehr Kosten einsparen müssen, um sich die Unterstützung der Oppositionsparteien zu sichern. Damit die Regierung die Unterstützung der Gewerkschaften nicht verliert, wird bei der Gestaltung der Reform besonders auf die Bedürfnisse der Kernarbeitnehmerschaft Rücksicht genommen. Die bevorzugte Behandlung von 'Insidern' in Ländern mit hohen institutionellen Zwängen geschieht auf Kosten der Arbeitnehmer, welche nicht von einflussreichen Interessenorganisationen vertreten werden ('Outsider'). In Ländern, wo linke Regierungen bei Reformen nicht auf die Unterstützung der Opposition angewiesen sind, hat die Regierung die Möglichkeit, die verbliebenen Ressourcen auf unterschiedliche Segmente der Arbeitnehmerschaft zu verteilen.' (Autorenreferat)'This paper examines the political mechanisms of welfare state policymaking in two countries with differing levels of institutional and political constraints, Germany and Ireland. The study analyzes the joint impact of political constraints and varying party governments on different dimensions of labor market policymaking. It comes to the conclusion that left-wing governments must cut spending more to accommodate the conservative opposition and gain its support when political and institutional constraints are high. To simultaneously ensure the support from pivotal extra-parliamentary actors, namely labor unions that are closely linked to the governing party, the left has to further compensate the unions' prime constituency, which is the well-integrated core workforce. The privileged treatment of labor market 'insiders' by left-wing governments in countries with high political constraints comes at the expenses of labor market 'outsiders'. Left-wing party governments in countries where political constraints are low are better able to address the needs of broader segments of society.' (author's abstract)

The joint impact of party politics and institutional constraints on social policy reforms in open economies

Defence date: 29 September 2010Examining Board: Evelyne Huber (University of North Carolina, Chapel Hill), Peter Mair (EUI) (Supervisor), Philip Manow (University of Heidelberg), Alexander Trechsel (EUI)Financial resources. My study contributes to the welfare state reform literature by proposing and testing a novel argument based on a multi-dimensional framework of social policy-making. In a nutshell, the results of the nested-analysis of social policy-making show that in institutional settings where political constraints are high, left-wing party government have an adverse effect on the very poor and unskilled in society and do not meet the general expectations that left-wing policy-making increases the outcome equality. My thesis thus extends the standard welfare state research that generally focuses on a single dimension, e.g. the size of expenditure. Unlike previous research that mainly focuses on the size of spending, this project also takes into account compensatory and redistributive aspects of policies as relevant dimensions. A major shortcoming of the many studies on welfare state reforms is their one-dimensional approach. The empirical analysis is based on a nested analysis design, which combines a quantitative macro-analysis with three case studies. The macro-analysis shows that leftist governments increase compensation, particularly in political systems with high institutional constraints, whereas the size of expenditure is not affected by government partisanship. The case country case studies on a series of unemployment insurance and labor market reforms in Germany, Ireland, and Switzerland trace the underlying policy-making processes that led to these macro-level outcomes. The overall results suggest that party politics in social policy-making still matters, especially in countries with high institutional constraints. However, the mechanisms work differently than generally assumed. The strong linkages between left-wing parties and labor unions may have a partially adverse effect on outcome equality. A high level of political constraints combined with a leftist party government leads to redistributive effects that are predominantly beneficiary for `insiders' which are represented by labor unions. The preferential outcome for the `insiders' comes at the expenses of `outsiders' (mainly unskilled, long-term unemployed and part-time employees), which are not represented by powerful interest organizations (Rueda 2007, 2005). My project thus integrates the apolitical institutionalist theory of welfare state development (`New Politics' approach by Pierson) with theories that assign more importance to political struggles, such as the `power resource' approach by Korpi (1989), Korpi and Palme (1998, 2003)

The clientelistic turn in welfare state policy-making : party politics in times of austerity

The book critically assesses the impact of party governments in different institutional settings on welfare state generosity and labour market reforms. Its key findings contradict earlier established views on the impact of leftist governments on welfare state policies. Specifically, left-wing governments are pursuing clientelistic policies when facing high institutional constraints and austerity and turn out to cater towards the core workforce rather than designing policies for the full range of labour market participants-- List of Tables vii -- List of Figures ix -- Preface x -- 1 Yes, They Can – Partisan Impact on Welfare State Change 1 -- 2 The Politics of Welfare State Retrenchment – A Re-Assessment 15 -- 3 Party Politics and Political Constraints 36 -- 4 Austerity, Party Governments and Welfare State Output 58 -- 5 The Mechanisms of Clientelistic Politics – Case Study Framework 78 -- 6 Germany 90 -- 7 Ireland 135 -- 8 Discussion and Conclusion 180 -- Bibliography 202 -- Index 223 -- About the Author 233Published version of EUI PhD thesis, 201

Growth Models Under Austerity

Fiscal policy is an integral part of a country’s growth model. This chapter shows how governments subordinate their fiscal policy to the macroeconomic regime of their country: governments in export-led economies are 2-3 times more likely to pursue fiscal austerity than those in demand-led regimes. These rigid fiscal policies in many countries are not in line with voter attitudes and individual-level macroeconomic beliefs. Contrary to the economic ideas that provide the intellectual foundation of fiscal austerity, voters believe that these policies are detrimental to economic growth, but there is great variation between left and right voters. These ideological differences translate into distinct fiscal policies under left and right governments in balanced growth regimes, but not in unbalanced regimes. These results point to a mismatch between government policy, especially in export-led economies, and voter attitudes. This mismatch potentially contributes to the disillusionment of voters that has been observed in many countries

Does Austerity Cause Polarization?

In recent decades, governments in many Western democracies have shown a remarkable consensus in pursuing fiscal austerity measures during periods of strained public finances. In this paper, we show that these decisions have consequences for political polarization. Our macro-level analysis of 166 elections since 1980 finds that austerity measures increase both electoral abstention and votes for non-mainstream parties, thereby boosting party system polarization. A detailed analysis of selected austerity episodes also shows that new, small and radical parties benefit most from austerity policies. Finally, survey experiments with a total of 8,800 respondents in Germany, Portugal, Spain and the United Kingdom indicate that the effects of austerity on polarization are particularly pronounced when the mainstream right and left parties both stand for fiscal restraint. Austerity is a substantial cause of political polarization and hence political instability in industrialized democracies

Voters and the IMF: Experimental Evidence From European Crisis Countries

IMF interventions are often associated with rising political discontent in countries where the Fund intervenes. Studies examining this claim, however, face the challenge of disentangling the impact of the IMF from the impact of the crisis that triggered the intervention. To address this challenge, we conduct survey experiments in Greece, Ireland, Portugal, and Spain and directly assess how voters evaluate the costs and benefits of an IMF intervention. We find that voters believe that the crisis is more likely be solved when the IMF intervenes, but they are also critical of the corresponding loss of national sovereignty. Because the former consideration, on average, dominates their assessment, IMF interventions increase support of voters for unpopular economic policies. Nonetheless, cross-country differences suggest that continued public support for intervention hinges on the IMF's ability to deliver on its promise to help resolve the crisis.</p

Three worlds of austerity: voter congruence over fiscal trade-offs in Germany, Spain and the UK

Political opposition to fiscal adjustments has varied significantly across countries. Our analysis links this variation to differences in the congruence of voter attitudes towards fiscal trade-offs across political blocs in different countries. These differences in attitudes, in turn, coincide with the implications of the distinct macroeconomic growth strategies that these countries pursue. Based on original survey data, we show that in Germany, supporters of different parties not only share similar views on the appropriate size of fiscal adjustment, but also on how to distribute these cuts across various spending items. In Spain, there is fundamental disagreement on the amount of austerity, but voters largely agree on the composition of fiscal adjustments. In the UK, there is disagreement between voters of diverging political blocs on both accounts. Variation in public attitudes, therefore, gives rise to very diverse political dynamics surrounding fiscal adjustments in different countries

Voters and the IMF: Experimental Evidence From European Crisis Countries

IMF interventions are often associated with rising political discontent in countries where the Fund intervenes. Studies examining this relationship, however, face the challenge of disentangling the impact of the IMF from the impact of the crisis that triggered the intervention. To address this challenge, we conduct survey experiments in Greece, Ireland, Portugal, and Spain and directly assess how voters evaluate the costs and benefits of an IMF intervention. We find that voters believe that the crisis will more likely be solved when the IMF intervenes, but they are also critical of the corresponding loss of national sovereignty. Because the former consideration, on average, dominates their assessment, IMF interventions increase the support of voters for unpopular economic policies. Nonetheless, cross-country differences suggest that continued public support for intervention hinges on the IMF’s ability to deliver on its promise to help resolve the crisis