Partisan Politics, Globalisation, and Different Welfare State Programs

The paper investigates the effect of political parties on disaggregated welfare state policies in times of globalisation. It argues that for labor market-related programs, on the one hand, partisan politics should intensify with globalisation. Left parties should respond to demands for compensation within the electorate, whereas right parties might use globalisation to justify benefit cuts. For non-labor market-related programs, on the other hand, partisan effects should decrease with globalisation. As demands for compensation should not include such programs, both right and left parties act in accordance with the efficiency theory, trying to provide favorable conditions for businesses and reduce spending. Employing time-series cross-section regression analysis, the paper tests these arguments for 21 OECD countries and the 1980 to 2011 period and for three welfare state programs: spending on passive labor market policy, old age, and health care. The findings largely provide empirical support.