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A Comprehensive Empirical Model of Welfare State Retrenchment
Unformatted Document Text:  composition, which largely influence the strategies of parties seeking political support. They concluded that in such circumstances, the assumption that parties classified as “conservative” would systematically aim at dismantling the welfare state while parties classified as progressive would defend the welfare state may no longer be true. In this sense, domestic economic situation plays a critical role on welfare policies. Among the alleged domestic challenges, low economic growth rates as well as the budget deficit constrain the size of government public services and expenditures. Other factors cited are mass unemployment (Huber and Stephens 2001), labor structure (Amable, Gatti and Schumacher 2006), patterns of paid work, and social inequality. Clayton and Pontusson (1998) in their article pointed a fact that in the 18 OECD countries, the inequality has increased with a diminishing of security of employment and income. They argued that this important point, which helps us understand the significant changes in the size and character of welfare state, is ignored by Pierson and his supporters. Unemployment is a basic socio-economic indicator. However, it also plays an important role in understanding the retrenchment of welfare states. Clayton and Pontusson (1998) used Swedish government as an example to illustrate the importance of unemployment rate. They pointed that Swedish government lowed the replacement rate of unemployment insurance from 90% to 75% in the first half of the 1990s. Had unemployment remained what it had been in the 1980s, which is relative low, these decisions might well have been described as a minor retrenchment of the welfare state. However, in the context of the dramatic increase of unemployment that occurred in the early 1990s, they take on a different significance. As one of the socio-economic factors, human capital account for the variation of welfare state retrenchment too. Clayton et al. (1998) argued that unskilled workers are more likely to become unemployed than more skilled workers, and their spells of unemployment tend to be longer than those of more skilled workers. Andrew Glyn noted that educational disparities in labor-force participation have also become more pronounced since the late 1970s: unable to find jobs, maybe older unskilled workers have simply dropped out of the labor force. 7

Authors: Sun, Feng.
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composition, which largely influence the strategies of parties seeking political support.
They concluded that in such circumstances, the assumption that parties classified as
“conservative” would systematically aim at dismantling the welfare state while parties
classified as progressive would defend the welfare state may no longer be true.
In this sense, domestic economic situation plays a critical role on welfare policies.
Among the alleged domestic challenges, low economic growth rates as well as the budget
deficit constrain the size of government public services and expenditures. Other factors
cited are mass unemployment (Huber and Stephens 2001), labor structure (Amable, Gatti
and Schumacher 2006), patterns of paid work, and social inequality.
Clayton and Pontusson (1998) in their article pointed a fact that in the 18 OECD
countries, the inequality has increased with a diminishing of security of employment and
income. They argued that this important point, which helps us understand the significant
changes in the size and character of welfare state, is ignored by Pierson and his
supporters.
Unemployment is a basic socio-economic indicator. However, it also plays an
important role in understanding the retrenchment of welfare states. Clayton and
Pontusson (1998) used Swedish government as an example to illustrate the importance of
unemployment rate. They pointed that Swedish government lowed the replacement rate
of unemployment insurance from 90% to 75% in the first half of the 1990s. Had
unemployment remained what it had been in the 1980s, which is relative low, these
decisions might well have been described as a minor retrenchment of the welfare state.
However, in the context of the dramatic increase of unemployment that occurred in the
early 1990s, they take on a different significance.
As one of the socio-economic factors, human capital account for the variation of
welfare state retrenchment too. Clayton et al. (1998) argued that unskilled workers are
more likely to become unemployed than more skilled workers, and their spells of
unemployment tend to be longer than those of more skilled workers. Andrew Glyn noted
that educational disparities in labor-force participation have also become more
pronounced since the late 1970s: unable to find jobs, maybe older unskilled workers have
simply dropped out of the labor force.
7


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