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Determinants of Relative Poverty in Advanced Capitalist Democracies
Abstract
Using relative poverty measures based on micro-level data from the Luxembourg Income Study, in conjunction with pooled time-series data for 14 advanced capitalist democracies between 1970 and 1997, the authors analyze separately the rate of pretax/transfer poverty and the reduction in poverty achieved by systems of taxes and transfers. Socioeconomic factors, including de-industrialization and unemployment, largely explain pre-tax/transfer poverty rates of the working-age population in these advanced capitalist democracies. The extent of redistribution (measured as poverty reduction via taxes and transfers) is explained directly by welfare state generosity and constitutional structure (number of veto points) and the strength of the political left, both in unions and in government.
... At the macro-level, social safety nets are a powerful macro-determinant of cross-jurisdictional differences in poverty (Bergh, Kolev, and Tassot 2017;Brady, Finnigan, and Hübgen 2017;Cantillon 2018;Haddow 2015;Moller et al. 2003;Nelson 2010;Notten and Guio 2019;OECD 2018;Renahy et al. 2018;Van den Berg et al. 2017). Comparative research links differences in poverty incidence among single-parent families and single working-age adults to differences in access, coverage, and generosity of social safety nets (Béland and Daigneault 2015;Brady et al. 2017;Herd et al. 2020;Hillel 2020;Nelson 2012;Noël 2020;OECD 2011). ...
Réduire la pauvreté est une tâche complexe. Nous cherchons à savoir si la situation des familles monoparentales et des adultes célibataires en âge de travailler s’est améliorée, dans un contexte politique qui priorise, du moins sur le plan rhétorique, la réduction de la pauvreté à l’échelle de toutes les grandes divisions administratives canadiennes. Ces deux groupes présentent des taux de pauvreté très élevés. Nous analysons les changements dans la pauvreté de 1999 à 2017 de manière relative (par rapport à l’individu moyen) et absolue (le pouvoir d’achat). En contrôlant les variables liées aux caractéristiques démographiques et régionales, nous constatons que le désavantage de pauvreté a diminué pour les deux groupes. L’amélioration des résultats pour les familles monoparentales est marquée et généralisée dans l’ensemble des provinces. Dans le cas des adultes célibataires en âge de travailler, l’amélioration est plus faible et se concentre dans les provinces qui connaissent une croissance économique vigoureuse. Ces résultats appuient l’affirmation selon laquelle les gouvernements ont priorisé l’inclusion des familles ayant des enfants à charge, tandis que l’inclusion des adultes célibataires en âge de travailler a été laissée en grande partie aux aléas de l’économie.
Much research has examined school-related sources of cross-national variation in academic skills, but we know far less about the role that broader socioeconomic conditions play. In this study, we examine how nations’ child poverty rates associate with their overall scores on international assessments of academic skills over time. We first establish theoretically why and how child poverty might undermine overall academic skills at the national level. We then use pooled time-series data on 40 nations that participated in four recent waves of the Programme for International Student Assessment (PISA) to analyze the impact of changes in child poverty rates on changes in nations’ overall academic skills ( N = 160 nation-years). Two-way fixed-effects models find support for two hypotheses and, to a lesser extent, a third: As child poverty increases within nations over time, (1) mean academic skills decrease, (2) the percentage of low-skilled students increases, and (3) the percentage of high-skilled students decreases (for math only). We conclude by discussing the theoretical and political implications of the findings.
Rectifying the imbalance of theorisation of education expansion focusing on its benefits, this study examines the relationship between education expansion and income inequality by turning our attention to its risky aspects. We investigate how expanding education might not effectively mitigate income inequality, because it brings about costly and risky competition for the positional value of education. We consider welfare regimes as relevant institutional factors associated with educational positionality based on the similarities between two environmental conditions that make education positional and two underlying dimensions of welfare regimes (de-stratification and commodification). We analysed higher education cases in twenty-four to twenty-five developed countries from 2000 to 2020. Our results show that higher education expansion initially reduced income inequality, but the reducing effect was attenuated, and eventually, it increased income inequality when higher education was positional, corresponding to the countries with a liberal regime and two East Asian countries such as Japan and Korea.
Despite the rise in employment, consistently high EU-average poverty rates continue to generate debates about the factors that explain the level and changes in the relative poverty rate, both within and across countries. Assuming a strong negative correlation between poverty and employment, the article investigates the role of four mechanisms responsible for this blurred relationship. Using decomposition analysis and macro-level regression analysis, we investigate the extent to which (i) the distribution of employment across households with different levels of work intensity, (ii) the expansion of non-standard work, (iii) the change in the effectiveness of social welfare systems, and (iv) the change in median income and the corresponding shift in the poverty threshold have contributed to changes in relative income poverty in the last decades. We found that employment growth benefits poverty reduction, but this positive effect was partially offset by the precarious characteristics of some newly created jobs. If the distribution of jobs had favoured the jobless more in the pre-crisis period, the relative income poverty rate would have been lower. Although the share of persons in jobless households decreased during the recovery years, their risk of poverty increased due to the retrenchment of social transfers during and after the Great Recession. Furthermore, the use of a floating threshold, which is linked to changes in median income, underestimates the strength of the relationships between poverty, employment and social transfers: when the poverty threshold is kept fixed, not only do the dynamics of poverty look different, but the estimated coefficients are considerably larger.
Does the welfare state affect human well-being outside the developed OECD world? For decades scholars have assessed the impact of the welfare state on a variety of outcomes, largely economic and social (for reviews see Kenworthy, Social Forces. 77:1119–1039, 1999; Kenworthy & Pontusson, Perspectives in Politics. 3:449–471, 2005; O’Connor, Review of Behavioral Economics. 4:397–420, 2017). While more recent focus has shifted to the impact of welfare programs on human well-being, this literature has suffered from several shortcomings. First, there has been an overriding focus on developed core OECD countries. Second, the primary outcome of interest has been on subjective well-being (life satisfaction, happiness). In this paper, we try to address these shortcomings to some extent. First, we extend the analysis to a wider and more diverse sample of countries. Second, we focus on a range of aspects of human well-being beyond life satisfaction. Third, we rely on a new measure of welfare impact that goes beyond mere overall spending—expert survey based coding of social security protections from the global Quality of Government 2021 data set. We find that in our sample of countries, this welfare measure exerts a positive and significant effect on a range of well-being outcomes. Implications for the study of the welfare state and well-being are discussed.
Utilizing the geographical polarization of American politics, we examine how state politics shape the implementation of downsizing. Combining power resources theory and the political-embeddedness approach in organizational studies, we propose that labor power resources at the state level, namely Democratic control of state government and state-level union membership, limit firms’ ability to implement drastic job cuts within the state. Based on data on the 697 largest, publicly traded US firms between 1981 and 2005, combined with their establishment-level employment data from EEO-1 reports, our analysis shows that post-downsizing reductions in employment were less severe in states with a worker-friendly political environment. But the limited effectiveness of labor’s power resources in right-to-work states and the American South suggests that there is considerable regional variation. Our findings provide strong evidence of the political embeddedness of firms, by demonstrating the growing salience of political considerations in corporate decision-making.
The need for increasing the number of financial resources to sustain local economies has forged new international political-economic landscapes. Redefining in the same vein, the colonial dynasty that re-distributed pre-colonialisation wealth has benefited mainly European countries, leaving others impoverished and economically raped. This rise of capitalism fuelled a thirst for power that led to inhumane, unfair, and unjust strategies by colonial empires and their corporate entities, leaving conquered countries in a state of profound social and economic fragmentation. Further to this, colonialists imposed foreign influences—such as religion/s, culture/s, and language—to these places to help aid their political (and assimilation) ambitions. Their objective through these tools was economic/cultural/racial assimilation and control, believing that such enabled cohesive communication and the easier establishment of new hierarchies of power. To this end, colonial powers established new cities to maintain nodes of power and (re)structured local and regional economy of regions.
Poverty eradication has always been a major challenge to global development and governance, which received widespread attention from each country. With the completion poverty alleviation task in 2020, relative poverty governance becomes an important issue to be solved in China urgently. Because of a large population, poor infrastructures, insufficient resources, and long-term uneven development raising the living standard of farmers in rural areas is critical to China's success in realizing moderate prosperity. Therefore, identifying the poor farmers, exploring the influence factors to relative poverty, and clarifying its effect mechanism in rural areas are significant for the subsequent poverty governance. Most of the previous studies adopted the method of apriori assuming the factor system and verifying the hypothesis. We innovatively constructed a relative poverty index system consistent with China's actual conditions, selecting all the possible variables that could affect relative poverty based on the existing literature, including individual characteristics, psychological endowment, and geographical environment, and rebuilt an experimental database. Then, through data processing and data analysis, the main factors influencing the relative poverty of farmers were systematically sorted out based on the machine learning method. Finally, 25 chosen influencing factors were discussed in detail. Research findings show that: 1) Machine learning algorithm is proved it could be well applied in relative poverty fields, especially XGBoost, which achieves 81.9% accuracy and the score of ROC_AUC reaches 0.819. 2) This study sheds light on many new research directions in applying machine learning for relative poverty research, besides, the paper offers an integral framework and beneficial reference for target identification using machine learning algorithms. 3) In addition, by utilizing the interpretable tools, the “black-box” of ML become transparent through PDP and SHAP explanation, it also reveals that machine learning models can readily handle the non-linear association relationship.
Social investment (SI) policies have been implemented by governments of affluent countries in hopes of safeguarding against new social risks and mitigating social exclusion by encouraging employment and making it easier for parents to balance work and family. Governments hope that human capital investment (education and job training) will better prepare workers for jobs, promote their employment and social inclusion, and reduce poverty. This article investigates whether SI policies contribute to lower poverty and inequality by analyzing data from 18 Organization for Economic Cooperation and Development countries between 1980 and 2013. The analysis finds, first, that SI policies (education and active labor market policy (ALMP)) alone may be less effective in generating lower poverty and inequality without redistribution, but when accompanied and supported by redistribution, SI policies are more effective in creating lower poverty and inequality. I propose the explanation that SI policies create lower-income poverty and inequality by creating individuals and households that can be salvaged and lifted out of poverty with redistribution, because SI policies help improve their skills and knowledge and employability, although they may be not quite able to escape poverty or low income without redistribution. As partial evidence, I present the result that education is associated with a lower poverty gap in market income. The analysis also finds that education and ALMP produce lower poverty and/or inequality in interaction with social market economies that redistribute more, and that augments the equalizing effects of education and ALMP. The results, thus, suggest the complementary roles of SI policies and redistribution.
China achieved comprehensive poverty eradication under the current standards in 2020, but eliminating absolute poverty does not mean the end of poverty alleviation and reduction; relative poverty will exist for a long time and has become the subject of poverty study. In this paper, the social poverty line (SPL) index is utilized to establish the relative poverty standard, and CHFS2017 is used to compare the regional distribution of relative poverty in China. The results show that the relative poverty in rural areas is more serious than that in urban areas. The rural relative poverty rate in five provinces and cities including Beijing is over 60%, and the rural relative poverty rate in Qinghai is low. The urban relative poverty rate in many provinces and cities of the central and western regions is below 40%, and the relatively high relative poverty rate in the eastern region has drawn attention to the issue of the income distribution. Moreover, a logit model for binary is employed for the influencing factor analysis of the relative poverty of urban and rural residents. The results show that the education year has a negative effect on the relative poverty of urban and rural residents. Happiness has a positive effect on urban residents, government financial expenditure and financial support for agriculture have different effects on rural residents and urban residents. Therefore, we put forward aiming at relative poverty in the rural areas of the central and western regions to reduce financial pressure and increase the benefits of poverty reduction.
Few studies examine the distribution of food insecurity in advanced capitalist nations. This research investigates cross-national food insecurity in the world's largest economies by estimating the impact of welfare spending and income inequality on food availability (measured by the FAO's Dietary Energy and Protein Supply indicators) and food accessibility (measured by the Food Insecurity Experience Scale) in 36 Organization for Economic Cooperation and Development (OECD) countries between the years of 2000 and 2018. Using a series of regression models on panel and cross-sectional data this research found that increases in state spending on social and health care are associated with (1) increases in food availability and (2) increases in food access. However, the findings also suggest that increases in food supplies do not produce more food security. Thus, for the OECD countries in this analysis, food availability is unrelated to food accessibility. We conclude by suggesting that high income countries that seek to promote global health should not only focus their efforts on poverty reduction polices that increase food accessibility within their own boarders, but must simultaneously ensure a more equitable global distribution of food.
Diyarbakır and Şanlıurfa (TRC2 Region) are the cities within the provinces of Turkey that have a high prevalence of poverty with an associated high child population. Due to the poverty in the cities of Diyarbakır andŞanlıurfa, this study investigated children working as a carrier in six purposefully selected districts, street markets, with the aim of providing social support for them to look forward to the future with hope. The research was conducted in 2019 by using questionnaires through face-to-face interviews, to cover all children in selected street markets within the scope of the full sampling volume. The data were analyzed using a structural equation modeling method. According to the results, 61.2% of working children are students, but most of them do not go to attend school; 8.7% of working children are the children of the Syrian refugees. Children work an average of 4.3 days a week and 8.6 h a day, with an average income of USD 1.6/day. As a result of the analysis, it was shown that the children received the most social support from their schoolmates (r = 0.428) to have hope in the future. This result shows that it is compulsory to include children in the education system. In this context, it is recommended that the financial contribution of children to their families should be paid by the state within the scope of social assistance and solidarity. Besides, strengthening social awareness and providing solidarity would contribute to the solution of the problem. The data obtained from this research could be used in studies and policies, to develop the concept of hope for combating poverty in regions with similar socioeconomic characteristics. This research is the first of its type conducted on this issue in Turkey.
Using the 2002 World Health Survey, we examine the association between welfare state regimes, gender and mental health among 26 countries classified into seven distinct regimes: Conservative, Southeast Asian, Eastern European, Latin American, Liberal, Southern/Ex-dictatorship, and Social Democratic. A two-level hierarchical model found that the odds of experiencing a brief depressive episode in the last 12 months was significantly higher for Southern/Ex- dictatorship countries than for Southeast Asian (odds ratio (OR) = 0.12, 95% confidence interval (CI) 0.05-0.27) and Eastern European (OR = 0.36, 95% CI 0.22-0.58) regimes after controlling for gender, age, education, marital status, and economic development. In adjusted interaction models, compared to Southern/Ex-dictatorship males (reference category), the odds ratios of depression were significantly lower among Southeast Asian males (OR = 0.16, 95% CI 0.08-0.34) and females (OR = 0.23, 95% CI 0.10-0.53) and Eastern European males (OR = 0.41, 95% CI 0.26-0.63) and significantly higher among females in Liberal (OR = 2.00, 95% CI 1.14-3.49) and Southern (OR = 2.42, 95% CI 1.86-3.15) regimes. Our results highlight the importance of incorporating middle-income countries into comparative welfare regime research and testing for interactions between welfare regimes and gender on mental health.
Highly corporatist countries such as Denmark and Sweden have recently moved away from centralized wage bargaining. A general sectoral coalition model explains the decentralization of wage bargaining as the outcome of a cross-class realignment between employers and wage earners in response to changes in the political, economic, and technological environment of wage bargaining. This realignment is aimed at increasing wage flexibility while containing cost pressures and is associated with greater inequality and the reorientation of macroeconomic policies away from full employment. A contrast of Denmark and Sweden with Austria and Norway, where wage bargaining institutions have not been changed, supports the argument.
Most social scientists, policymakers, and citizens who support the welfare state do so in part because they believe social-welfare
programs help to reduce the incidence of poverty. Yet a growing number of critics assert that such programs in fact fail to
decrease poverty, because too small a share of transfers actually reaches the poor, or because such programs create a welfare/poverty
trap, or because they weaken the economy. This study assesses the effects of social-welfare policy extensiveness on poverty
rates across fifteen affluent industrialized nations over the period 1960–91, using both absolute and relative measures of
poverty. The results strongly support the conventional view that social-welfare programs reduce poverty.
We examine gender differences in the relative poverty of men and women in eight industrialized countries. The analyses are based on data from the Luxembourg Income Study, which includes data from the United States, Canada, Australia, the United Kingdom, West Germany, Sweden, Italy, and the Netherlands. We examine the importance of the gender-specific demographic compositions of marriage, parenthood, and employment in accounting for differences in men's and women's poverty rates, both within and across countries. The cross-national comparisons suggest that the relative importance of demographic characteristics differs by country and that factors such as religion, culture, and government policies also help determine the gap between women's and men's poverty rates.
Through a pooled cross-section time-series analysis of the determinants of wage inequality in sixteen OECD countries from 1973 to 1995, we explore how political-institutional variables affect the upper and lower halves of the wage distribution. Our regression results indicate that unionization, centralization of wage bargaining and public-sector employment primarily affect the distribution of wages by boosting the relative position of unskilled workers, while the egalitarian effects of Left government operate at the upper end of the wage hierarchy, holding back the wage growth of well-paid workers. Further analysis shows that the differential effects of government partisanship are contingent on wage-bargaining centralization: in decentralized bargaining systems, Left government is associated with compression of both halves of the wage distribution.
The literature on the determinants of welfare state effort displays many inconsistencies and contradictions. This article takes important steps toward resolving these issues with the use of pooled cross-sectional and time-series analyses. The findings are that various independent variables affect different measures of welfare state effort in different and theoretically meaningful ways. Of special importance are the contrasting effects of Christian democracy and social democracy on transfer payments, social benefits expenditure, and total government revenue. There is also a strong effect of constitutional structure on welfare state effort, a finding that provides the first solid support for the state-centered perspective in a quantitative analysis.
Debates on how to reduce poverty and inequality have focused on two controversial questions: Should social policies be targeted to low-income groups or be universal? Should benefits be equal for all or earnings-related? Traditional arguments in favor of targeting and flat-rate benefits, focusing on the distribution of the money actually transferred, neglect three policy-relevant considerations: (1) The size of redistributive budgets is not fixed but reflects the structure of welfare state institutions. (2) A trade-off exists between the degree of low-income targeting and the size of redistributive budgets. (3) Outcomes of market-based distribution are often more unequal than those of earnings-related social insurance programs. We argue that social insurance institutions are of central importance for redistributive outcomes. Using new data, our comparative analyses of the effects of different institutional types of welfare states on poverty and inequality indicate that institutional differences lead to unexpected outcomes and generate the paradox of redistribution: The more we target benefits at the poor and the more concerned we are with creating equality via equal public transfers To all, the less likely we are to reduce poverty and inequality.
We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these “panel-corrected standard errors” perform well. The utility of our approach is demonstrated via a reanalysis of one “social democratic corporatist” model.
This article analyzes the processes of distribution and redistribution in postindustrial democracies. The authors combine a pooled time-series data base on welfare state effort and its determinants assembled by Huber, Ragin, and Stephens (1997) with data on income distribution assembled in the Luxembourg Income Survey (lis) archive. In the case of the lis data, the authors recalculate the microdata in order to remove the distorting influence of pensioners on pretax, pretransfer income distribution. They examine the determinants of two dependent variables: pretax, pretransfer income inequality and the proportional reduction in inequality from pre to posttax and transfer inequality. They test hypotheses derived from power resources theory against alternatives derived from the literature on the development of the welfare state and the determinants of income inequality. The results offer strong support for power resources theory, particularly in the case of reduction in inequality. Union density, unemployment, and percentage of female-headed households were the main determinants of pretax and transfer inequality (R2 = .64), while leftist government, directly and indirectly through its influence on the size of the welfare state, was found to be by far the strongest determinant of distribution (R2 = .81).
Social protection does not always mean 'politics against markets.' In this chapter we argue, as did Polanyi (1944), that social protection rescues the market from itself by preventing market failures. More specifically, we contend that social protection aids the market by helping economic actors overcome market failures in skill formation. We show, in this chapter, that different types of social protection are complementary to different skill equilibria. 1 The market failure problem in the provision of skills is generally attrib-uted to employers' reluctance to invest in transferable skills. Here we pay more attention to workers' reluctance to invest in specific skills. Young people are less likely to invest in specific skills if the risk of loss of employment opportunities that require those specific skills is high. Employers who rely on specific skills to compete effectively in inter-national markets therefore need to institutionalize some sort of guarantee to insure workers against potential risks. Without implicit agreements for long-term employment and real wage stability, their specific skills will be under-supplied. Employers' promises are not, however, sufficiently credible by themselves. This is why social protection as governmental policy becomes critical.
Wage setting has been one of the most heavily studied institutions in the field of comparative political economy over the past two decades, and quantitative measures of wage-setting arrangements have played a major role in this research. Yet the proliferation of such measures in recent years presents researchers with a sizable array from which to choose. In addition, some scholars are rather skeptical about the validity and/or reliability of these measures. This article offers a survey and assessment of fifteen wage-setting measures. It attempts to answer questions about (1) how these indicators differ from one another in conceptualization and measurement strategy; (2) which are the most valid and reliable; (3) the strengths and weaknesses of measures of wage centralization versus those of wage coordination; (40 particular countries or time periods for which there are noteworthy discrepancies in scoring; (5) how sensitive empirical findings are to the choice of wage-setting measure.
We present a theory of social policy preferences that emphasizes the composition of peopleÕs skills. The key to our argument is that individuals who have made risky investments in skills will demand insurance against the possible future loss of income from those investments. Because the transferability of skills is inversely related to their specificity, workers with specific skills face a potentially long spell of unemployment or a significant decline in income in the event of job loss. Workers deriving most of their income from specific skills therefore have strong incentives to support social policies that protect them against such uncertainty. This is not the case for general skills workers, for whom the costs of social protection weigh more prominently. We test the theory on public opinion data for eleven advanced democracies and suggest how differences in educational systems can help explain cross-national differences in the level of social protection.
An influential line of argument holds that globalization causes economic uncertainty and spurs popular demands for compensatory welfare state spending. This article argues that the relationship between globalization and welfare state expansion is spurious and that the engine of welfare state expansion since the 1960s has been deindustrialization. Based on cross-sectional-time-series data for fifteen OECD countries, the authors show that there is no relationship between globalization and the level of labor-market risks (in terms of employment and wages), whereas the uncertainty and dislocations caused by deindustrialization have spurred electoral demands for welfare state compensation and risk sharing. Yet, while differential rates of deindustrialization explain differences in the overall size of the welfare state, its particular character-in terms of the share of direct government provision and the equality of transfer payments-is shaped by government partisanship. The argument has implications for the study and the future of the welfare state that are very different from those suggested in the globalization literature.
Gender relations, as embodied in the sexual division of labor, compulsory heterosexuality, discourses and ideologies of citizenship, motherhood, masculinity and femininity, and the like, profoundly shape the character of welfare states. Likewise, the institutions of social provision the set of social assistance and social insurance programs, universal citizenship entitlements, and public services to which we refer as "the welfare state" affect gender relations in various ways. Although many recent studies of the welfare state use a comparative analysis to study the factors shaping the welfare state, few of these studies have paid systematic attention to gender. Similarly, most feminist work has not been systematically comparative. This paper summarizes the current state of understanding of the varying effects of welfare states on gender relations, and vice versa.
A LONG-STANDING, positive relationship between the economic well- being of the poor and the growth of the economy has changed. In the 1960s rapid economic growth and a relatively stable macrpeconomy were associated with a 10 percentage point reduction in the proportion of people living below the official poverty line. Unstable macroeco- nomic conditions in the 1970s were associated with no progress against poverty, and the recession of the early 1980s brought substantial in- creases in poverty. Despite a sustained macroeconomic expansion from 1983 to 1989, however, poverty reduction was only moderate. The pov- erty rate in 1989, for example, was more than 1 percentage point higher in 1989 than in 1979. Thus, although the experience of the 1960s had sug- gested that a "rising tide raises all boats," persistent poverty in the 1980s indicates a weakening in the trickle-down mechanism. In this paper, we explore how disadvantaged individuals and families (those in the lower part of the income distribution) fared from the eco- nomic growth of the 1980s. We start by documenting the seeming inef- fectiveness of macroeconomic growth to help the disadvantaged during this period. Movements in both the poverty rate and family income in- equality indicate a break in the relationship between macroeconomic We are grateful to David Ellwood, Rachel Friedberg, Claudia Goldin, Christopher Jencks, Dale Jorgenson, and Daniel Slesnick for helpful discussions and comments, and to David Lee for outstanding research assistance. This research was supported by the National Science Foundation (Katz) and the Alfred P. Sloan Foundation (Cutler). The data used in this paper are available from the authors on request.
We investigate the forces affecting the distribution of income by analyzing an unbalanced panel of information for 16 industrialized countries for the years 1966 through 1994. Income inequality is measured with the Gini coefficient of equivalent disposable income; individuals are the unit of analysis; the statistical analysis uses panel methods. The results suggest that many factors affect the development of income inequality. Some factors are strictly economic: A decreased industrial sector generally fosters inequality, and some support is found for the view that increased trade of manufactured goods from developing countries is also a factor. Other forces are outside a strictly defined market sphere: Low inequality is found when a large proportion of the labor force belongs to a trade union and also when there is a large public sector. In addition, demographic circumstances are important, since the proportion of the population under age 15 has a positive effect on inequality. We find, however, no association between the unemployment rate and inequality.
Although sociologists have expressed growing interest in globalization, they have devoted little sustained empirical attention to the many claims made in its name. I focus on the link that has been drawn between globalization and the deindustrialization of the advanced industrial societies. To examine this, I employ a pooled time-series of cross-sections data set that combines observations on 18 OECD nations across the 1968–1992 period. Fixed-effects regression models that control for unmeasured country-specific effects reveal support for arguments that implicate foreign direct investment and North-South trade in the declining percentage of the labor force employed in manufacturing in the OECD countries. Regression results also show that deindustrialization across this period is largely explained by a model that combines an attention to the post-Golden Age “troubles” of northern manufacturing with classic generalizations of the process of development. Interpretation of the empirical findings is tempered by an exercise in counterfactual history, which reveals that deindustrialization would have been considerable in these countries even if the upswings in direct investment and southern imports had not occurred or if the performance of the manufacturing sector had been stronger.
The causes of the expansion and cross-national variation in the provision of welfare state goods and services are examined. Social democratic governance is by far the most important determinant of the public delivery of services and is one of the most important determinants of the public funding of the provision of welfare state goods and services. Christian democratic governance is an important determinant of public funding of services, but is not related to public delivery. State structure is also an important determinant. Women's labor force participation is an important determinant of the expansion of public social welfare services net of other social, political, and historical factors. The analysis also shows an interactive effect of women's labor force participation and social democratic governance on public delivery of welfare state services. We conclude that public delivery of a wide range of welfare state services is the most distinctive feature of the social democratic welfare state and that this feature is a product of the direct and interactive effects of social democracy and women's mobilization.
In the early 1980s, many observers, argued that powerful organized economic interests and social democratic parties created successful mixed economies promoting economic growth, full employment, and a modicum of social equality. The present book assembles scholars with formidable expertise in the study of advanced capitalist politics and political economy to reexamine this account from the vantage point of the second half of the 1990s. The authors find that the conventional wisdom no longer adequately reflects the political and economic realities. Advanced democracies have responded in path-dependent fashion to such novel challenges as technological change, intensifying international competition, new social conflict, and the erosion of established patterns of political mobilization. The book rejects, however, the currently widespread expectation that 'internationalization' makes all democracies converge on similar political and economic institutions and power relations. Diversity among capitalist democracies persists, though in a different fashion than in the 'Golden Age' of rapid economic growth after World War II.
The Golden Age of post‐war capitalism has been eclipsed, and with it seemingly also the possibility of harmonizing equality and welfare with efficiency and jobs. Most analyses believe that the emerging post‐industrial society is overdetermined by massive, convergent forces, such as tertiarization, new technologies, or globalization, all conspiring to make welfare states unsustainable in the future. This book takes a second, more sociological and institutional look at the driving forces of economic transformation. What stands out as a result is that there is post‐industrial diversity rather than convergence. Macroscopic, global trends are undoubtedly powerful, yet their influence is easily rivalled by domestic institutional traditions, by the kind of welfare regime that, some generations ago, was put in place. It is, however, especially the family economy that holds the key as to what kind of post‐industrial model will emerge, and to how evolving trade‐offs will be managed. Twentieth‐century economic analysis depended on a set of sociological assumptions that now are invalid. Hence, to grasp better what drives today's economy, it is necessary to begin with its social foundations. After an Introduction, the book is arranged in three parts: I, Varieties of Welfare Capitalism (four chapters); II, The New Political Economy (two chapters); and III, Welfare Capitalism Recast? (two chapters).
The 1990s have seen dramatic restructuring of state social provision in the US, the UK, Canada and Australia. This has occurred largely because of the rise of market liberalism, which challenges the role of the state. This important book examines the impact of changes in social policy regimes on gender roles and relations. Structured thematically and systematically comparative, it analyses three key policy areas: labor markets, income maintenance and reproductive rights. Largely driven by issues of equality, it considers the role of the state as a site for gender and sexual politics at a time when primacy is given to the market, developing an argument about social citizenship in the process. Eminent scholars in the field, Julia O'Connor, Ann Orloff and Sheila Shaver make a landmark contribution to debates about social policy and gender relations in this era of economic restructuring and deregulation.
Gender and Welfare State Regimes focuses on how social provision, taxation, and labour market policies structure and transform gender relations in several advanced industrial democracies. A central question is whether gender policy regimes coincide or cut across welfare state regimes. The first chapters examine the construction of gender in policies of countries representing the same welfare state regime—the conservative, liberal and social democratic regimes—while the subsequent chapters compare policies across welfare state regimes. The book argues that policy variations across the countries are shaped by differing strategies and demands of women's movements, the organizational strength of labour and industrial relations frameworks, and the constellations of parties supporting equality measures, policy legacies, and state structures.
Among contemporary nations, the relationship between income equality and national
wealth exhibits an inverted-V shape — low among the richest and poorest nations, and
high for nations with intermediate wealth. To examine the reasons for this relationship,
I hypothesize that both political democracy and educational enrollment are related in a
similar way to income inequality. Two data sets are used in this analysis: modifted
version of Muller's set of 62 nations circa 1965-1975 and Hoover's data set. Multiple
regression reveals that measures of political democracy and the educational enrollment
levels have an inverted-V relationship with income inequality. National wealth (GNP)
had no consistent direct effect on income inequality. A satisfactory .specification of
national levels of income inequality must include the polynomial functions of political
democracy and education.
This is the second of a two‐volume study of the adjustment of advanced welfare states to international economic pressures, in which leading scholars detail the wide variety of responses in 12 countries to the challenges to their employment and social policy systems in the period between the first oil‐price crises of the early 1970s and the increasing economic globalization of the 1980s and 1990s. Chapters in this volume provide in‐depth studies of countries’ adjustment experiences over three decades, beginning with a snapshot of the ‘golden age’ of the welfare state c.1970, then proceeding with a chronology of the successive external economic challenges and internal policy responses up until today, ending with a depiction of the new model or model in the making, and of what went right and what went wrong. The country studies include three welfare states representing the ‘Anglo‐Saxon’ model (the UK, Australia, and New Zealand), seven varieties of the ‘Continental’ welfare state (Switzerland, Austria, Belgium, and the Netherlands, Germany, France, and Italy), and two ‘Scandinavian’ welfare states (Sweden and Denmark). In addition, the volume includes analyses focusing on cross‐national differences in the labour‐market participation of women and of older workers, on the employment effects of service liberalization, and on international tax competition.
Gender and Welfare State Regimes focuses on how social provision, taxation, and labour market policies structure and transform gender relations in several advanced industrial democracies. A central question is whether gender policy regimes coincide or cut across welfare state regimes. The first chapters examine the construction of gender in policies of countries representing the same welfare state regime—the conservative, liberal and social democratic regimes—while the subsequent chapters compare policies across welfare state regimes. The book argues that policy variations across the countries are shaped by differing strategies and demands of women's movements, the organizational strength of labour and industrial relations frameworks, and the constellations of parties supporting equality measures, policy legacies, and state structures.
1. Introduction 2. Globalization, democracy, and the welfare state 3. Global capital, political institutions, and contemporary welfare state development: quantitative analysis 4. Big welfare states in global markets: internationalization and welfare state reform in the Nordic social democracies 5. Globalization and policy change in corporatist conservative welfare states 6. Internationalization and liberal welfare states: a synopsis 7. Assessing long-term impacts: the impact of globalization on taxation, institutions, and control of the macroeonomy 8. Conclusions: national welfare states in a global economy.
This is the first of a two‐volume study of the adjustment of advanced welfare states to international economic pressures, in which leading scholars detail the wide variety of responses in 12 countries to the challenges to their employment and social policy systems in the period between the first oil‐price crises of the early 1970s and the increasing economic globalization of the 1980s and 1990s. Rejecting any notion of convergence to some kind of neo‐liberal orthodoxy, the authors find that most countries have remained true to the basic features of their post‐war model as they have liberalized their employment and social systems. Moreover, within different welfare‐state constellations, while some countries are still struggling to adjust, others have reached a new sustainable equilibrium. On the basis of in‐depth country studies in Volume II (including the United Kingdom, Australia, New Zealand, Switzerland, Austria, Belgium, the Netherlands, Germany, France, Italy, Sweden, and Denmark), the present volume provides comparative analyses of countries’ economic vulnerabilities and institutional capabilities, of the role of policy learning in effective policy responses, and of the role of values and discourse in the politics of adjustment. While these chapters show that there is no convergence in welfare‐state institutions and that there is no single solution or formula for successful adaptation, they also demonstrate that there are multiple paths towards a successful adjustment of advanced welfare states to international economic pressures.
We examine the determinants of inequality in the distribution of family income in approximately 3,100 counties of the United States in 1970, 1980, and 1990. Such a study provides a "window" on global trends in social inequality during the period, which spans the tail end of the Kuznets curve and the more recent upswing in income inequality. Results from random-effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the Kuznetsian pattern of declining inequality with economic development, a positive effect of urbanization on inequality, a declining positive impact of sector dualism, an increasing positive effect of educational heterogeneity, and a persistent effect of racial dualism. Several variables associated with the recent upswing in inequality have significant effects: female labor-force participation (negative), female-headed households (positive), percent of the population over age 65 (changes from positive to negative over the period), manufacturing employment (negative), and unemployment (ambiguous). We also discuss methods of estimating the Gini coefficient for income inequality at the county level and measures of sector (farm/nonfarm) dualism, racial (Black/White) dualism, and educational heterogeneity.
We investigate the relationship between income inequality and economic development using an unbalanced cross-national data set that allows observations on inequality and development for several years for the same country. The 88 countries in this data set contribute 279 observations dated from 1952 to 1988. Income inequality is measured in three ways--as income share of the top quintile of income-receiving units and with two estimates of the Gini coefficient (decile-based and quintile-based). The relationship between income inequality and development in this data set exhibits the inverted-U shape characteristic of the Kuznets curve. Regression analyses using pooling techniques with the assumptions of a random effects model show that the curvilinearity is largely accounted for by a model based on three major processes: labor force shifts from agriculture to industry; the demographic transition; and the spread of education. These processes are represented in regression models by four variables. The variables have significant effects on income inequality in directions predicted by the model: sector dualism (positive effect); percent of labor force in agriculture (negative effect); natural rate of population increase (positive effect); and secondary school enrollment (negative effect). The effects of political democracy, Marxist-Leninist regime, horticultural or agrarian subsistence technology prior to industrialization, an indicator for Taiwan, and calendar time are also estimated.
Regressions on data jointly structured in space and time, commonly referred to as the pooling of cross sections of time series, can be formidable both in the strength of their design properties and in the number of special statistical problems encountered with them. This essay deals briefly with the potential applications of pooled design and more extensively with the special statistical problems commonly associated with analysis in space and time together. Four estimators--ordinary least squares, least squares with dummy variables, error components, and an adaptation of Box-Jenkins ARMA models to the pooled estimation problem--are reviewed, with an effort to suggest where each may find application in political science research. The four estimators are then illustrated by analysis of the regional dynamics in party issue polarization over issues of racial desegregation in the U.S. House of Representatives
Two powerful icons have dominated descriptions of historical trends in income inequality in the United States and other industrial
societies: the Kuznets curve and the Great U-Turn.
Recent scholarship on gender and the state suggests that women's agency has been critical to the formation of welfare policy. Yet, nations with strong, mobilized feminist movements do not necessarily develop the most supportive welfare policies. By historically analyzing the emergence of British and French family allowance policy, the author suggests that the key to this conundrum lies in the interaction between women's movements and the value given to women's paid and unpaid labor. Woman-friendly state policy requires an active women's movement and ideologies valuing women's paid and unpaid labor. In addition, women's movements must be able and willing to strategically use those ideologies to pursue their goals.
The distribution of pay differs significantly across countries and over time among advanced industrial societies. In this paper, institutional and political determinants of pay inequality an studied in sixteen countries from 1980 to 1992. The most important factor in explaining pay dispersion is the level of wage-setting, i.e., whether wages are set at the level of the individual, the plant, the industry, or the entire private sector. The impact of centralization is the same whether centralization occurs via collective bargaining or via government involvement in private-sector wage-setting. The concentration of unions and the share of the labor force covered by collective bargaining agreements also matter. After controlling for wage-setting institutions, other variables such as the governing coalition, the size of government, international openness, and the supply of highly educated workers have little impact. Economic, political, and norm-based explanations for the association of centralization with egalitarian outcomes are discussed.
In the presence of heteroscedasticity, ordinary least squares (OLS) estimates are unbiased, but the usual tests of significance are generally inappropriate and their use can lead to incorrect inferences. Tests based on a heteroscedasticity consistent covariance matrix (HCCM), however, are consistent even in the presence of heteroscedasticity of an unknown form. Most applications that use a HCCM appear to rely on the asymptotic version known as HC0. Our Monte Carlo simulations show that HC0 often results in incorrect inferences when N ≤ 250, while three relatively unknown, small sample versions of the HCCM, and especially a version known as HC3, work well even for N's as small as 25. We recommend that: (1) data analysts should correct for heteroscedasticity using a HCCM whenever there is reason to suspect heteroscedasticity; (2) the decision to use HCCM-based tests should not be determined by a screening test for heteroscedasticity; and (3) when N ≤ 250, the HCCM known as HC3 should be used. Since HC3 is simple to compute, we encourage authors of statistical software to add this estimator to their programs.
The author argues that the inverted-U shaped relationships between income inequality and development is largely accounted for by transitional development proceses related to the dualism (both economic and generalized) of traditional and modern sectors of developing societies. The author identifies generalized sociocultural dualism as a critical factor. Regression analyses based on 56 countries circa 1970 show that the curvilinearity of the inequality-development relationships is captured by a core model involving the spread of education, the demographic transition and generalized dualism, and labor force shifts and sector dualism. These three processes are represented in regression models. The effects of variables that have been previously proposed as causes of income inequality vanish or are attenuated in the presence of this core model. -from Author
The debate on the resurgence of income inequality in some advanced industrial societies has often focused on the impact of an increasingly integrated world economy, typified by growing capital mobility, heightened international competition, and an increase in migration. This study represents one of the first systematic, cross-national examinations of the role of globalization in the inequality "U-turn." Results indicate, on the one hand, that total inequality variation is principally affected by the percentage of the labor force in agriculture, followed by the institutional factors union density and decommodification, and only then by globalization. On the other hand, longitudinal variation in inequality, while still dominated by the percentage of the labor force in agriculture, is also principally affected by aspects of globalization, such as southern import penetration and direct investment outflow, and to a lesser extent by migration. In other words, globalization explains the longitudinal trend of increasing inequality that took place within many industrial countries better than it does cross-sectional inequality differences among countries.
Comparative social scientists have developed various arguments about the determinants of social policies, especially those connected with twentieth-century “welfare states.” Structure-functionalists argue that the social policies of modern nations necessarily converge due to an underlying logic of industrialism, while neo-Marxists treat such policies as state responses to the social reproduction requirements of advanced capitalism. Yet most students of social policies are more attuned to history and politics. Concentrating on two dozen or fewer industrial capitalist democracies, many scholars have explored the alternative ways in which democratic political processes have helped to create programs and expand social expenditures. For a fuller range of nations past and present, scholars have also asked how ties to the world-economy, patterns of geopolitical competition, and processes of transnational cultural modelling have influenced social policies. Finally, there is now considerable interest in the indepe...
The purpose of this article is twofold. The first aim is to examine 15 OECD countries from the point of view of the so-called third-generation studies, analysing if the development of poverty and income transfers has been uniform in countries classified under the same welfare state models. This has been done to test how appropriate it is to use welfare state models as an analytical tool in comparative welfare state research. The second aim is to examine the effect of different structural factors on poverty and income transfers. Obtained results indicate that two demographic variables studied behave somewhat differently. The share of older people in the population is – not very surprisingly – connected to an increase in income transfers. In the case of younger population groups, the results are the opposite. The results show that the greater the proportion of older people in the population, the lower the poverty rates. Social policy has in many countries consisted primarily of pension policy, and investments in the elderly population are now beginning to bear fruit. Good pension schemes diminish the immediate poverty risk of older people. As a consequence of their increased well-being, the overall poverty rate will fall. In addition to demographic factors, the results indicate that the unemployment rate is connected, on the one hand, to growth in income transfers and, on the other hand, also to increases in poverty. However, unemployment’s effect on poverty is not straightforward. The direct effect is indeed an increase in poverty but, if income transfers are taken into account, the indirect effect is a decrease in poverty, since unemployment increases income transfers (unemployment benefits), which on their side alleviate poverty.
This study aims to compare the anti-poverty effectiveness of taxes and income transfers among western welfare states. It is shown that countries' poverty outcome can be decomposed into the level of market-generated poverty, the overall level of welfare efforts, and the poverty reduction efficiency of taxes and transfers. Using the LIS microdata, the decomposition analysis suggests that welfare states differ widely with respect to the anti-poverty effectiveness of taxes and transfers and that cross-national variation in such effectiveness is mainly attributable to differences in the level of welfare efforts rather than in poverty reduction efficiency.
The Real Worlds of Welfare Capitalism traces how individuals fare over time in each of the three principal types of welfare state. Through a unique analysis of panel data from Germany, the Netherlands and the US, tracking individuals’ socio-economic fate over fully ten years, Goodin, Headey, Muffels and Dirven explore issues of economic growth and efficiency, of poverty and inequality, of social integration and social autonomy. It is common to talk of the inevitability of tradeoffs between these goals. However, in this book the authors contend that the social democratic welfare regime, represented here by the Netherlands, equals or exceeds the performance of the corporatist German regime and the liberal US regime across all these social and economic objectives. They thus argue that, whatever one’s priorities, the social democratic welfare regime is uniquely well-suited to realizing them.
Complex policy issues deserve frequent reassessment, and the relationship between economic growth and equality is undeniably complex. Policymakers who care about trade-offs between the two goals continue to press the scientific limits of empirical economics. It takes an enormous sample of long-term national experiences to approximate the data base necessary to move debate from allegation to evidence. Fortunately, the sample continues to expand. Since the 1950s dozens of countries have produced evidence on income distribution and growth, and the records of some currently developed countries have been extended back into the 17th century. This article assesses the empirical harvest. Most of our inferences, however, are based on American and British history.
This paper presents a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic. This estimator does not depend on a formal model of the structure of the heteroskedasticity. By comparing the elements of the new estimator to those of the usual covariance estimator, one obtains a direct test for heteroskedasticity, since in the absence of heteroskedasticity, the two estimators will be approximately equal, but will generally diverge otherwise. The test has an appealing least squares interpretation.
Human Capital is Becker's classic study of how investment in an individual's education and training is similar to business investments in equipment. Recipient of the 1992 Nobel Prize in Economic Science, Gary S. Becker is a pioneer of applying economic analysis to human behavior in such areas as discrimination, marriage, family relations, and education. Becker's research on human capital was considered by the Nobel committee to be his most noteworthy contribution to economics. This expanded edition includes four new chapters, covering recent ideas about human capital, fertility and economic growth, the division of labor, economic considerations within the family, and inequality in earnings. "Critics have charged that Mr. Becker's style of thinking reduces humans to economic entities. Nothing could be further from the truth. Mr. Becker gives people credit for having the power to reason and seek out their own best destiny."âWall Street Journal
The problem raised in this article is how to conceptualize and measure the redistributive effects of the public sector. First, a formal model is developed. The model is used to illuminate some logical relationships between basic variables affecting distribution of income. Secondly, the model is used for the construction of various empirical indicators of the redistributive effects of the public sector. Thirdly, empirical illustrations are given from Sweden in 1967 and 1980. The conclusion is that the circulation of money and the distribution of transfers ‘in kind’ through the public sector have equalizing net effects. The poorest half of the population has its income increased by 32 per cent in 1967 and 75 per cent in 1980 through transfers from the rich half, via the public sector; workers have their income increased by 10 per cent in 1967 and by 16 per cent in 1980 through transfers from the other classes. The increase in redistributive effect of the public sector between these two years is mainly due to the increase in its size and not to a more pronounced distributional profile
In the early 1980s, many observers, argued that powerful organized economic interests and social democratic parties created successful mixed economies promoting economic growth, full employment, and a modicum of social equality. The present book assembles scholars with formidable expertise in the study of advanced capitalist politics and political economy to reexamine this account from the vantage point of the second half of the 1990s. The authors find that the conventional wisdom no longer adequately reflects the political and economic realities. Advanced democracies have responded in path-dependent fashion to such novel challenges as technological change, intensifying international competition, new social conflict, and the erosion of established patterns of political mobilization. The book rejects, however, the currently widespread expectation that 'internationalization' makes all democracies converge on similar political and economic institutions and power relations. Diversity among capitalist democracies persists, though in a different fashion than in the 'Golden Age' of rapid economic growth after World War II.