Partisanship, political constraints, and employment protection reforms in an era of austerity

Abstract

Why do some governments adopt unpopular reforms entailing far-reaching liberalization of the labor market, while others opt only for marginal adjustments or even regulatory reforms? This paper explains the likelihood of different types of reforms as an effect of different constellations of government partisanship and veto players. Combining the ‘blame avoidance’ and ‘veto players’ logics of politics, I argue that veto players have either a constraining or enabling effect depending on the partisan orientation of government. Liberalization is most likely to be adopted either by right parties facing few veto players, or by left parties in contexts with a high degree of power sharing. Regulatory reforms are most likely when left governments enjoy strong power concentration, but marginal regulation may also be adopted under external pressure by right governments facing many veto players. An analysis of employment protection reforms in 24 European Union countries during 1990–2007 supports the argument that the effect of political constraints and opportunities on the choice of reforms is shaped by partisan differences.