Economic Openness and Domestic Demand for Social Protection: A Multi-Level Analysis of Social Security Preferences between 1990 and 2006

Abstract

Abstract Comparative research revealed that social programs did not suffer significant decline despite globalisation and stiffer international competition. Instead, a striking stability of social expenditure is observed which is explained by voters’ demands for social protection because of new uncertainties connected to economic openness. The domestic demand approach conceives the welfare state as a means to compensate for the risks a globalised economy puts on citizens’ job security, and as a means to foster the acceptance of an open economy. Given the prominence of these assumptions little research has been conducted to test them. Does economic openness actually increase unemployment and feelings of job insecurity? Does this in turn lead to a higher voter demand for social security? This paper analyses the propositions of domestic demand approaches based on a data set comprised of waves of the module “Role of Government” from the International Social Survey Programme (1990, 1996 and 2006) and additional country-level features. The results show that economic openness has a negative effect when other insecurity-causing trends are controlled. Also subjective job insecurity instead of the projected positive effect rather shows a negative relation. Social security demand decreases the more job insecurity people perceive. This is interpreted as a consequence of the fear of those still employed that voting for more expenditures would endanger existing jobs. Moreover, the hypothesis that economic openness now spreads economic risks and feelings of insecurity over a broader social strata rather than remaining mired at the low end of the social spectrum is not confirmed.