Explaining convergence of OECD welfare states: a conditional approach

Abstract

Existing studies have found only limited empirical evidence of welfare state convergence. Moreover, although there are good theoretical reasons both for and against welfare state convergence, there are virtually no studies that have explicitly tested the assumed effects. We argue that the concept of conditional convergence helps to both better describe and explain the phenomenon. By applying error correction models, we examine conditional convergence of various types of social expenditure in 21 OECD countries between 1980 and 2005. Our empirical findings go beyond the existing literature in two respects. First, we show that there is very strong evidence of convergence across all categories of social expenditure when conditional factors are taken into account. Second, we demonstrate that the speed of convergence is highly driven by globalization and European Union membership and shaped by existing welfare state structures.

The Convergence of Welfare State Indicators in Europe: Evidence from Panel Data

“…However, most of these studies either focus on broad but easily available data of aggregated social expenditure applying advanced econometric techniques (see Alsasua et al 2007, Attia and Berenger 2007, Schmitt and Starke 2011, Kittel and Obinger 2003 or on certain social protection indicators like replacement rates. Articles using the latter concept usually desist from applying sophisticated econometric panel techniques but rely on simplistic measurements of disparity like the coefficient of variation (see Montanari et.…”

Sosyal Harcamaların Yoksulluk Üzerine Etkileri: Ampirik Bir İnceleme

“…Nitekim eğitim harcamalarının gayri safi katma değer içerisindeki payın-da bir artış gerçekleşmesi, bireylerin beşeri sermaye donanımını ve niteliğini artırarak yoksulluk oranının düşmesine yol açmaktadır. Bu yönüyle eğitim harcamaları, beklediği ve literatürdeki diğer çalışmalarda da görüldüğü gibi (Ferragina ve Seeleib-Kaiser, 2011;Patrinos ve Psacharopoulos, 2011;Schmitt ve Starke, 2011;Lange ve Topel, 2006;Çalışkan, Civan ve Karakuyu, 2011: s.7), yatırım harcamalarının etkileri ile benzer sonuçlar vermektedir.…”

Trade Exposure and the Polarization of Government Spending in the American States

“…Many empirical studies verified the positive relationship between economic globalization and government spending (Cameron, 1978;Katzenstein, 1985;Garrett, 1995Garrett, , 1998Rodrik, 1998;Burgoon, 2001;Boix, 2004;Schmitt & Starke, 2011). These scholars contend that economic globalization opens national economies to new competition in international markets, which despite some benefits to the overall economy leads to feelings of economic insecurity stemming from worries of wage stagnation and job losses.…”

“…Although the three leading theories (compensation theory, efficiency theory, and new growth theory) each offer a competing explanation for how globalization affects government spending, they most commonly conceptualize economic globalization as the relative degree of exposure a state has to the global economy (Garrett, 1995(Garrett, , 1998Katzenstein, 1985;Swank, 2005;Rudra, 2002). The compensation school maintains that economic globalization leads to welfare state expansion due to increasing citizen demand for protection against economic anxiety exacerbated by exposure to global markets, such as unemployment and wage stagnation (Cameron, 1978;Wood, 1994;Garrett, 1995Garrett, , 1998Burgoon, 2001;Boix, 2004;Scheve & Slaughter, 2004;Walter, 2010;Schmitt & Starke, 2011). The efficiency school, sometimes called the "race-to-the-bottom" or neo-liberal convergence thesis, contends that a heavy reliance on global trade leads to shrinking government spending because large public sectors repel international investment and decrease the competitiveness of export manufacturing (Garrett and Mitchell, 2001;Rudra, 2002;Swank, 2005;Genschel, 2002;Swank & Steinmo, 2002; see also Mosley, 2005;Genschel, 2004).…”