Partisan Differences and the Interventionist State in Advanced Democracies

In this paper, we present new evidence on whether political parties still matter in economic policy-making. We investigate four policy instruments, namely product market regulation, subsidies, business taxation and social spending, in 21 OECD countries between 1980 and 2015. Moreover, we systematically consider how cabinet duration and the challenges of globalization, the EU and economic problems (public debt, rising unemployment, sluggish economic growth) condition partisan differences. We find that partisan differences only really make themselves felt after about one term in office. Moreover, with the exception of product market regulation, partisan differences tend to become more pronounced as globalization increases while European integration does not seem to condition partisan effects. The conditioning effect of domestic economic problems on partisan differences depends on a policy instrument’s salience. In highly salient issue areas (social expenditure and corporate taxation), we only find partisan differences when problems are low; in contrast, economic problems seem to emphasize partisan differences in non-salient issue areas (product market regulation, subsidies).