Working-Class Strength by Institutional Design? Unionization, Partisan Politics, and Unemployment Insurance Systems, 1870 to 2010

Abstract

Abstract:Many studies have found that countries with Ghent systems of unemployment insurance have higher rates of unionization than countries with state--administered unemployment insurance. With data going further back in history, this paper demonstrates that the introduction of Ghent systems had no effect on unionization rates. We argue that the Ghent effect identified in the existing literature came about as a result of increasing state subsidization and benefit generosity in the 1950s and 1960s. Exploring the partisan politics surrounding Ghent systems, we show that progressive Liberals ("Social Liberals") favored Ghent designs while Social Democrats favored state--administered unemployment insurance before the Second World War. We also present some evidence suggesting that Left governments, faced with Ghent systems that were not of their choosing, promoted state subsidization in the postwar era, and thus helped generate the Ghent effect identified in the existing literature.2 This paper engages in a historical--comparative analysis of the effects of the design of unemployment insurance on rates of unionization and the politics of designing unemployment insurance in some twenty countries that are today industrialized, rich and democratic. The motivation behind our study is as follows.

Union Membership and Collective Bargaining: Trends and Determinants

“…But the important role of union officials in the provision of unemployment benefits and the regular contact with the union during spells of unemployment are said to strongly motivate workers to join unions and remain union members when becoming unemployed (for details, see Van Rie et al 2011). The high union density rates in these countries found in cross-national studies are therefore often attributed to positive effects of their Ghent systems, even though Rasmussen and Pontusson (2018) demonstrate with data going back to 1870 that the first-time introduction of (initially not very generous) Ghent systems had no effect on unionization. It is striking that among the 25 countries listed in Table 2, union density is indeed highest in Denmark, Sweden, Finland and Belgium in 2017/2018.…”

The Immigrant‐Native Gap in Union Membership: A Question of Time, Sorting, or Culture?

“…4 4 We combine data from Rasmussen and Pontusson (2017), Visser (2016) and Visser, Hayter and Gammarano (2015) to create an encompassing measure of unionization shares between countries. As data quality is an issue beyond Western countries we therefore estimate effect both on world‐wide level data and restricted to western countries.…”

Reading History Forward

“…This, in turn, has been used to infer that Left parties were behind creating Ghent systems before World War II. However, enlisting new data that go back to 1900, Rasmussen and Pontusson (2017) show that Ghent systems had no effect on unionization rates and that the Ghent effect instead is a result of increasing state subsidization in the decades after 1945. Furthermore, they argue that it was Social Liberal parties that favored Ghent systems, whereas genuine Left parties (i.e., Social Democrats) normally opted for state-administered unemployment insurance before World War II (see the online appendix for two additional examples).…”

“…Furthermore, they argue that it was Social Liberal parties that favored Ghent systems, whereas genuine Left parties (i.e., Social Democrats) normally opted for state-administered unemployment insurance before World War II (see the online appendix for two additional examples). Rasmussen and Pontusson's (2017) criticism of earlier research on the Ghent effect illustrates how scholars who read history backward become predisposed to overlooking confounding factors, thereby making their explanations too deterministic (Capoccia and Ziblatt 2010, 939;Pierson 2000). More particularly, retrospective inquiry risks imputing the causes that explain the advent of institutions from those that explain their later consolidation (Boucoyannis 2015).…”

“…The most egregious example of reading history backward in recent research is arguably the many large-N studies that analyze the period after 1945 but project their findings backward in time in problematic ways, thereby introducing selection bias. For instance, Rasmussen and Pontusson (2017, 28) note how most quantitative studies of the “Ghent effect”—that is, the notion that a Ghent system of unemployment insurance (as opposed to a state-administered system) increases union density—read “history backwards.” The Ghent effect is based on findings from studies that analyze the post-1960 period, which show that countries with Ghent systems have higher union density. This, in turn, has been used to infer that Left parties were behind creating Ghent systems before World War II.…”