New article on the Political Economy of Welfare State Reforms

In a recent paper, published in West European Politics, I have analyzed – together with Carsten Jensen, Seonghui Lee and Christoph Arndt – how governments strategically time welfare state legislation. Our main theoretical argument boils down to the observation that governments may not simply “electioneer” welfare state expansions and cutbacks at their discretion over the electoral term with cutbacks in the beginning of a mandate and expansions at the end, as the literature on political business cycles expects. This is because governments are bound by their election manifesto and these manifestos mostly involve pledges to expand social policies. Hence, whereas it seems reasonable from a political economy perspective to indeed expect that governments expand the welfare state toward the end of their mandate in order to reap electoral gains, governmemnts have to weigh possible cutbacks in the beginning of a mandate against the need to fulfill – mostly expansive – electoral pledges.

Building on our new dataset on welfare state reform legislation (Welfare State Reform Dataset, WSRD), we test these claims and find empirical evidence that support our theoretical expectations. Indeed, welfare state legislation seems to follow a u-shaped trajectory over the course of a governments mandate with a mixed (or slightly expansive) period in the first months, followed by a cutback period, and a clearly expansionist stance toward the end. The exception from the rule are governments made up of parties that have pledged to cut the welfare state in the first place. Here the u-shaped relationship is less pronounced and a linear positive trajectory fits the data better (i.e. cutbacks in the beginning, expansions in the end) (see Figure below).

We hope that these findings contribute to the debate about the strategic timing of welfare state cutbacks, the political business cycle, and public policies, in general.

Georg Wenzelburger