Partisan influence on social and labor market policies in the Silver Age of welfare state retrenchment: evidences from 19 OECD countries

Abstract

Are governing parties able to shape social and labor market policies according to their ideological positions or are they overwhelmed by socio-economic and institutional constraints? The paper answers this crucial question by developing a comparative study on 19 OECD countries from 1985 to 2011. It investigates whether the location of governments on a continuous left–right scale affects four measures of welfare state generosity: namely, public spending in social policies, in active and passive labor market policies and the level of unemployment insurance replacement rate. The results obtained through an error correction model show that governing parties are unable to affect social and labor market policies in the short-run, when economic dynamics prevail. However, in the long-run, partisanship gains relevance: when the government coalition moves to the right, there is a negative impact on all the measures of welfare state generosity.