Globalization, Veto Players, and Welfare Spending

Abstract

This article examines the role of globalization and its interaction with domestic political institutions (veto players) in shaping welfare spending in 18 advanced industrial countries from 1960 to 2000. First, the author evaluates how integrated world markets have influenced welfare expenditures. Results suggest that globalization increased welfare spending in this sample. Second, the author studies how domestic political institutions mediate the impact of globalization on welfare spending. With a new data set on veto players for the years 1960 to 2000, the author finds that as the number of and ideological distance among veto players increases, the upward pressure of globalization on welfare spending is reduced. The results show that globalization has pressured states to expand welfare spending, but the extent to which states have responded to pressure critically depends on the number of and ideological distance among veto players, whose agreement is required to change welfare policy.