The Impact of Economic Globalization on the Employment Policies in 19 Western Democracies from 1985 to 2010. Limited Change or Radical Shift towards Workfare?

Abstract

Among the most significant issues facing welfare states are the implications of economic globalization for employment policies. This issue is confronted from the viewpoint of workfarism, the incentives created by social policies for increasing participation in the labor market. To measure the limited changes involved, the analytical framework also includes institutional stickiness, pointing to the capability of welfare state institutions to resist external pressures. Panel data on capital flow, an active labor market policy (ALMP), and unemployment benefit (UB) expenditures in 19 welfare states between 1985 and 2010 are drawn from the Organisation for Economic Cooperation and Development (OECD) and the KOF Index of Globalization (KOF). The Vector Autoregressive Moving-Average model with exogenous regressors (VARMAX)-regression analysis found institutional stickiness to be a more significant factor than capital flow in 61% of the observations. The impact of capital flow was particularly significant in the United Kingdom, and in northern and continental Europe, and a tendency toward workfarism was detected in 37% of the welfare states. From a comparative perspective, the impact via the increased capital flow to workfare-related policies is a matter of contrasts rather than a unilateral phenomenon.

Globalisation and Inclusive Growth in Africa: The Role of Institutional Quality

“…Several studies have been conducted to examine the nexus between globalisation and different indicators of economic development to unravel the extent to which globalisation has promoted or harmed economies. Consequently, most of these studies have considered the impact of globalisation on economic growth (Heimberger, 2021a), poverty (Anderson et al, 2018), inequality (Heimberger, 2020), government expenditure (Heimberger, 2021b), education (Triwiyanto & Prasojo, 2019) and employment (Das & Ray, 2020;Näätänen, 2015). Most of these studies are meta-analyses of the effects of globalisation and provide a comprehensive analysis of how globalisation has affected the aforementioned variables.…”