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A Comprehensive Empirical Model of Welfare State Retrenchment
Unformatted Document Text:  A Comprehensive Empirical Model of Welfare State Retrenchment Introduction Since the end of the 1970s, under the pressure of stagnation of tax revenue and the persistent budget deficits in most of the advanced industrial countries, the redistributive logic of the welfare state has been challenged by the neo-liberals as contradiction to the basis principle of capitalism (Clayton and Pontusson 1998). The welfare reforms by the Reagan administration in the US and the Thatcher administration in the UK started a new era of welfare austerities in almost all the Western democracies. This new political and economic phenomenon rapidly captured the attentions of the scholars. A large body of literatures focused on two questions: Does welfare resilience exist? What kind of factor that plays a critical role in welfare retrenchment? There were dramatic debates on these two questions. One side represented by Pierson, argued that there was welfare-state resilience and policy feedback instead of institutional factors played an important role in welfare policy-making (Pierson 1994, 1996). The other side contended that there was no evidence of welfare resilience and questioned Pierson’s “new politics” theory using new measurement and statistical analysis. Furthermore, the latter side also took efforts to explore the determinants of welfare policy-making in the era of retrenchment by building various empirical models. However, the study within this filed suffers from an oversupply of theories and models and a shortage of comprehensive comparative empirical tests. Theories in welfare retrenchment were typically tested a few at a time, resulting a lack of comparable findings and a systematic understanding of evolution of welfare policies in the retrenchment era. With a plethora of theories, conjectures, and hypotheses of determinants of welfare state retrenchment in hand, I believe that it is necessary to conduct a thorough empirical appraisal of those arguments. Thus, the main task of the paper is to provide an answer to the question which factor has important effect on the welfare state retrenchment in the developed countries since 1979. I aim to incorporate different variables from various theories into a comprehensive model and explore the major effects on the divergence of welfare state in 2

Authors: Sun, Feng.
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A Comprehensive Empirical Model of
Welfare State Retrenchment
Introduction
Since the end of the 1970s, under the pressure of stagnation of tax revenue and the
persistent budget deficits in most of the advanced industrial countries, the redistributive
logic of the welfare state has been challenged by the neo-liberals as contradiction to the
basis principle of capitalism (Clayton and Pontusson 1998). The welfare reforms by the
Reagan administration in the US and the Thatcher administration in the UK started a new
era of welfare austerities in almost all the Western democracies.
This new political and economic phenomenon rapidly captured the attentions of
the scholars. A large body of literatures focused on two questions: Does welfare
resilience exist? What kind of factor that plays a critical role in welfare retrenchment?
There were dramatic debates on these two questions. One side represented by
Pierson, argued that there was welfare-state resilience and policy feedback instead of
institutional factors played an important role in welfare policy-making (Pierson 1994,
1996). The other side contended that there was no evidence of welfare resilience and
questioned Pierson’s “new politics” theory using new measurement and statistical
analysis. Furthermore, the latter side also took efforts to explore the determinants of
welfare policy-making in the era of retrenchment by building various empirical models.
However, the study within this filed suffers from an oversupply of theories and models
and a shortage of comprehensive comparative empirical tests. Theories in welfare
retrenchment were typically tested a few at a time, resulting a lack of comparable
findings and a systematic understanding of evolution of welfare policies in the
retrenchment era. With a plethora of theories, conjectures, and hypotheses of
determinants of welfare state retrenchment in hand, I believe that it is necessary to
conduct a thorough empirical appraisal of those arguments.
Thus, the main task of the paper is to provide an answer to the question which
factor has important effect on the welfare state retrenchment in the developed countries
since 1979. I aim to incorporate different variables from various theories into a
comprehensive model and explore the major effects on the divergence of welfare state in
2


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