Social Pacts as Coalitions of the Weak and Moderate: Ireland, Italy and South Korea in Comparative Perspective

Baccaro, Lucio; Lim, Sang‐Hoon

doi:10.1177/0959680107073965

Cited by 84 publications

(92 citation statements)

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“…Some scholars have argued that employer participation is necessary for pacts to survive for extended periods (Baccaro, 2006;Baccaro and Simoni, 2006;Baccaro and Lim, forthcoming;Culpepper, 2008). While this may be true in the most recent periods, other pacts have occurred in the absence of employer support or even in places where employers were too fragmented to formulate any coherent response whatever (e.g., in Australia).…”

Section: Introductionmentioning

confidence: 99%

“…Virtually every case study of a pact makes some connection between pacts and politicians' concerns with elections. More recently Baccarro and his coauthors (Baccaro, 2006;Baccaro and Simoni, 2006;Baccaro and Lim, forthcoming;Hamann and Kelly, 2007) hypothesized that pacts are most likely during periods of minority or caretaker government. I therefore include a dummy variable taking on value of 1 for all periods in which the government controls a majority of the lower house and 0 otherwise.…”

Section: Governments and Partisanshipmentioning

confidence: 99%

“…It seems likely that the Accord was effective in helping Labor win the 1983 and 1986 Australian federal elections (Ahlquist, 2007;Singleton, 1990). Observers of Ireland and Italy have credited pacts there with stabilizing wage bargaining relationships (Baccaro and Lim, forthcoming;Culpepper, 2008;Teague, 1995). In Spain and Portugal, pacts do seem to have smoothed the implementation of controversial policies.…”

Section: Introductionmentioning

confidence: 99%

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Policy by Contract: electoral cycles, parties and social pacts, 1974–2000

Ahlquist¹

2010

The Journal of Politics

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Persistent cross-national differences in the economic performance among rich democracies flies in the face of both neo-classical macroeconomics, which sees no positive role for government, and the lack of evidence for political business cycles in economic outcomes. To provide a more nuanced understanding of how elections, parties, and interest groups interact to produce policies, I examine "social pacts": formal policyfor-concession bargains between governments, union federations, and employers. I propose a model in which in which pacts are attempts to make policy promises credible to voters. The model predicts that pact emergence should follow the electoral cycle and respond to the partisanship of government. Using an original data set of social pacts, this paper investigates the model's predictions along with both domestic and international variables purported to be associated with pact onset. While the findings confirm the importance of economic conditions, especially unemployment, in determining the onset of pacts, political considerations are also important. The electoral cycle and partisan concerns have a strong influence on the timing of pacts. The findings point to one avenue through which electoral cycles affect macroeconomic policy.Keywords: economic policy, political business cycle, wage bargaining, social pacts, event history models 1 Beginning with the stagflation of the 1970s and continuing through the subsequent process of increased economic integration, rich democracies confronted economic challenges that traditional Keynesian demand management is not well-prepared to address. Policy approaches to these problems have varied across time and space. Policy makers have, at times, turned to interest rate policies to dampen inflation at the cost of high unemployment and severe economic downturns. Governments have legislated directly over wages and prices. Others have drastically overhauled their entire political-economic institutional structure. Some attempted negotiated agreements with peak associations of labor and capital-social pacts-in an attempt to liberalize labor markets or gain control of wage demands, prices, and government budgets. Neoclassical economic theory, with its reliance on assumptions of rational expectations and perfectly competitive labor and product markets, has little so say about government actions of this sort; government policy can only induce temporary fluctuations that are ultimately detrimental. The new Keynesian macroeconomics, however, relaxes the assumption of perfectly competitive labor markets, opening a channel for policy-makers and wage bargaining agents to affect the real economy (Iversen and Soskice, 2006;Soskice, 2000). With inflation fears returning and severe economic problems again looming large, understanding the conditions under which governments and economic actors can come to an agreement undergirding good economic performance is critical. These pacts are therefore of special interest.A parallel literature on the "political business cycle" also eme...

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Section: Introductionmentioning

confidence: 99%

Section: Governments and Partisanshipmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Policy by Contract: electoral cycles, parties and social pacts, 1974–2000

Ahlquist¹

2010

The Journal of Politics

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“…Second-generation social pacts became more numerous in the early 1990s, after stipulation of the Maastricht Treaty, when admission to EMU was made conditional to ful…lment of certain prerequisites entailing monetary policy independence, in ‡ation control 15 See also Alvarez et al (1991), Baccaro and Lim (2007) and Hamann and Kelly (2007). 16 Alternatively, we might assume that the government is characterized by a relatively lower public expenditure target.…”

Section: The Cooperative Solutionmentioning

confidence: 99%

The macroeconomics of social pacts

Acocella

Bartolomeo

Tirelli

2009

Journal of Economic Behavior & Organization

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In this paper we analyze macroeconomic interactions between trade unions, the central bank and the …scal policymaker. We explicitly model unions'concern for public expenditure, paving the way for an analysis of the potential gains from cooperation between the …scal policymaker and the unions, i.e. the so-called corporatist or social pacts that have characterized economic policies in a number of European countries in the last few decades. We also highlight the profoundly di¤erent incentives generated by institutional arrangements such as the Maastricht criteria and the Stability and Growth Pact. The former has unambiguously induced more e¢ cient outcomes; the latter is likely to back…re! Jel: E42, E58, E61, E62, E64, H30, J51, J58.

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“…Ireland and Southern European countries such as Italy and Spain stood out in the literature because they did not have the embedded collective bargaining arrangements characteristic of coordinated market economies (CMEs), in which governments engaged routinely with unions in policy concertation. Scholars who observed these processes found that they were adopted by weak governments that needed the support of the social partners in order to adopt difficult political reforms (Baccaro and Lim, 2007;Baccaro and Simoni, 2008;Avdagic, 2010).…”

Section: Introductionmentioning

confidence: 99%

Why don't governments need trade unions anymore? The death of social pacts in Ireland and Italy

Culpepper

Regan

2014

Socio-Economic Review

106

101

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During the 1990s, a prominent strategy of economic adjustment to the challenges of competitiveness and budgetary retrenchment among the non-corporatist countries of Europe was the negotiation of social pacts. Since the onset of the great recession and the Eurozone crisis, social pacts have been conspicuous by their absence. Why have unions not been invited into government buildings to negotiate paths of economic adjustment in the countries hardest hit by the crisis? Drawing on empirical experiences from Ireland and Italy-two cases on which much of the social pact literature concentrated-this article attributes the exclusion of unions to their declining legitimacy. Unions in the new European periphery have lost the capacity either to threaten governments with the stick of protest or to seduce policymakers with the carrot of problem-solving. They are now seen as a narrow interest group like any other.

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Social Pacts as Coalitions of the Weak and Moderate: Ireland, Italy and South Korea in Comparative Perspective

Cited by 84 publications

References 21 publications

Policy by Contract: electoral cycles, parties and social pacts, 1974–2000

Policy by Contract: electoral cycles, parties and social pacts, 1974–2000

The macroeconomics of social pacts

Why don't governments need trade unions anymore? The death of social pacts in Ireland and Italy

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