The New Politics of the Welfare State This page intentionally left blank The New Politics of the Welfare State Edited by Paul Pierson GreatClarendonStreet,OxfordOX26DP OxfordUniversityPressisadepartmentoftheUniversityofOxford ItfurtherstheUniversity'sobjectiveofexcellenceinresearch,scholarship, andeducationbypublishingworldwidein OxfordNewYork AucklandBangkokBuenosAiresCapeTownChennai Dar esSalaamDelhiHongKongIstanbulKarachiKolkata KualaLumpurMadridMelbourneMexicoCityMumbaiNairobi SãoPauloShanghaiTaipeiTokyoToronto Oxfordisaregisteredtrademark ofOxfordUniversityPress intheUK andincertainothercountries PublishedintheUnitedStatesby OxfordUniversityPressInc., NewYork ©theseveralcontributors2001 Themoralrightsoftheauthorshavebeenasserted DatabaserightOxfordUniversityPress(maker) Firstpublished2001 Allrightsreserved.Nopartofthispublicationmaybereproduced, storedinaretrievalsystem,or transmitted,inanyform orbyanymeans, withoutthepriorpermissioninwriting ofOxfordUniversityPress, oras expresslypermittedbylaw, or under termsagreedwiththeappropriate reprographicsrightsorganization.Enquiriesconcerningreproduction outsidethescopeoftheaboveshouldbesenttotheRightsDepartment, OxfordUniversityPress,attheaddressabove Youmustnotcirculatethisbookinanyotherbindingorcover andyoumustimposethissameconditiononanyacquirer BritishLibraryCataloguinginPublicationData Dataavailable LibraryofCongressCataloginginPublicationData Thenew politicsofthewelfarestate/ editedbyPaulPierson. p.cm. Includesbibliographicalreferencesandindex. 1. Welfarestate.2. Comparativegovernment.I.Pierson,Paul. JC479.N482000 361.6′5—dc2100-060670 ISBN0-19-829753-X ISBN0-19-829756-4(Pbk.) Acknowledgements ThisvolumegrowsoutoftwoconferencesheldattheCenterforEuropeanStudies,HarvardUniversity, inNovember 1997 and October 1998. The Center remains a wonderful home for this kind of collaborative work, and as usual Charles Maier and Abby Collins were generous in backing this project from the outset. I am grateful to the Center's Program for the Study of Germany and Europe for financial assistance. Lisa Eschenbach provided superb staff support. I have also been fortunate in working with Oxford University Press, and owe thanks to Dominic Byatt and Amanda Watkins for their enthusiasm and efficiency. Many members of the academic community in Cambridge and beyond provided the project's participants with valuable feedback, both during our conferences and afterwards. Acknowledgements for particular help are indicated in various chapters, but I wish to make special note of the extensive and valuable comments I received from Keith Banting and Margaret Weir following the group's first meeting. Miguel Glatzer and Andrew Karch provided important research assistance to me as I was initiating this collaboration. Finally, I would like to thank the other contributors to this volume. Their professionalism, good humour, and energy rendered the administrative tasks associated with editing tolerable and greatly magnified the intellectual and personal rewards. Cambridge, September 2000 Paul Pierson This page intentionally left blank Contents List of Figures ix List of Tables x Abbreviations xii List of Contributors xiv Introduction. Investigating the Welfare State at Century's End Paul Pierson 1 Part I.Sources of Pressure on the Contemporary Welfare State 1.Round Up the Usual Suspects! Globalization, Domestic Politics, and Welfare State Change Herman Schwartz 17 2.The Dynamics of Welfare State Expansion: Trade Openness, De-industrialization, and Partisan Politics Torben Iversen 45 3.Post-industrial Pressures on the Mature Welfare States Paul Pierson 80 Part II.Adjustment Dynamics: Economic Actors and Systems of Interest Intermediation 4.Welfare State and Production Regimes in the Era of Retrenchment Evelyne Huber and John D. Stephens 107 5.Comparative Institutional Advantages of Welfare State Regimes and New Coalitions in Welfare State Reforms Philip Manow 146 6.The Political Economy of Social Pacts: ‘Competitive Corporatism’ and European Welfare Reform Martin Rhodes 165 viii CONTENTS Part III.Adjustment Dynamics Parties, Elections, and Political Institutions 7.Political Institutions and Welfare State Restructuring: The Impact of Institutions on Social Policy Change in Developed Democracies Duane Swank 197 8.Political Institutions, Veto Points, and the Process of Welfare State Adaptation Giuliano Bonoli 238 9.Partisan Competition and Welfare State Retrenchment: When Do Politicians Choose Unpopular Policies? Herbert Kitschelt 265 Part IV.Comparing Policy Domains 10.The Comparative Political Economy of Pension Reform John Myles and Paul Pierson 305 11.Who Pays for Health Care Reform? Susan Giaimo 334 12.Labour Market Regimes under Threat? Sources of Continuity in Germany, Britain, and Sweden Stewart Wood 368 Conclusion 13.Coping with Permanent Austerity: Welfare State Restructuring in Affluent Democracies Paul Pierson 410 References 457 Index 501 List of Figures 1.1. Cleavages over social protection 37 2.1. Average public spending and trade across 17 OECD countries, 1952–95 46 2.2. Trade openness and public spending in 16 OECD countries, 1960–93 (%) 49 2.3. Trade dependence and production volatility across 16 OECD countries 51 2.4. De-industrialization and change in welfare spending for 16 OECD countries, 1960–93 55 2.5. The labour market risk structure and the effects of exogenous shocks 56 2.6. Theoretical variables and their measurement 59 2.7. Earnings equality and private service sector expansion, 1970–92 70 2.8. The evolution of manufacturing employment as a percentage of the working age population in Sweden and the United States, 1880–1995 74 2.9. Convergence towards the service economy, 1960–95 77 3.1. Manufacturing and service employment 1960–94 (% civilian employment, OECD average) 85 3.2. Public spending on pensions and health 1960–90 (% GDP, average for 20 OECD countries) 89 3.3. Debt/GDP and interest payments/GDP: G7 countries 1970–94 91 9.1. The trajectory of six countries through the opportunities for political-economic reforms 299 13.1. Welfare state clienteles as a percentage of the electorate, 1950–80 412 13.2. Identifying the viable space for policy reform 419
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