This article examines the role of globalization and its interaction with domestic political institutions (veto players) in shaping welfare spending in 18 advanced industrial countries from 1960 to 2000. First, the author evaluates how integrated world markets have influenced welfare expenditures. Results suggest that globalization increased welfare spending in this sample. Second, the author studies how domestic political institutions mediate the impact of globalization on welfare spending. With a new data set on veto players for the years 1960 to 2000, the author finds that as the number of and ideological distance among veto players increases, the upward pressure of globalization on welfare spending is reduced. The results show that globalization has pressured states to expand welfare spending, but the extent to which states have responded to pressure critically depends on the number of and ideological distance among veto players, whose agreement is required to change welfare policy.
Achen, C. (2000, July). Why lagged dependent variables can suppress the explanatory power of other independent variables. Paper presented at the annual meeting of the Political Methodology Section of the American Political Science Association, Los Angeles .
2.
Allan, J.P., & Scruggs, L. (2004). Political partisanship and welfare state reform in advanced industrial societies. American Journal of Political Science, 48(3), 496-512.
3.
Armingeon, K., Leimgruber, P., Beyeler, M., & Menegale, S. (2005). Comparative political dataset 1960-2002. Berne, Switzerland: University of Berne, Institute of Political Science.
4.
Aspinwall, M. (1996). The unholy social trinity: Modelling social dumping under conditions of capital mobility and free trade. West European Politics, 19(1), 125-150.
5.
Bambra, C. (2005). Cash versus services: Worlds of welfare and the decommodification of cash benefits and health care services. Journal of Social Policy, 34(2), 195-213.
6.
Barro, R. (1998). Determinants of economic growth. Cambridge, MA: MIT Press.
7.
Beck, N., & Katz, J.N. (1995). What to do (and not to do) with time-series-cross-section data. American Political Science Review, 89(3), 634-647.
8.
Beck, N., & Katz, J.N. (1996). Nuisance vs. substance: Specifying and estimating time-series-cross-section models. Political Analysis, 6(1), 1-36.
9.
Brady, D., Beckfield, J., & Seeleib-Kaiser, M. (2005). Economic globalization and the welfare state in affluent democracies, 1975-1998. American Sociological Review, 70, 921-948.
10.
Brambor, T., Clark, W.R., & Golder, B. (2006). Understanding interaction models: Improving empirical analyses. Political Analysis, 14, 63-82.
11.
Burgoon, B. (2001). Globalization and welfare compensation: Disentangling the ties that bind. International Organization, 55(3), 509-551.
12.
Cameron, D. (1978). The expansion of the public economy: A comparative analysis. American Political Science Review, 72, 1243-1261.
13.
Castles, F., & Mair, P. (1984). Left-right political scales: Some expert judgements . European Journal of Political Research, 12, 73-88.
14.
Crepaz, M., & Moser, A. (2004). The impact of collective and competitive veto points on public expenditures in the global age. Comparative Political Studies, 37(3), 259-285.
15.
Drache, D. (1996). From Keynes to K-Mart: Competitiveness in a corporate age. In R. Boyer & D. Drache (Eds.), States against markets: The limits of globalization (pp. 31-61). New York: Routledge.
16.
Freeman, R. (1995). Are your wages set in Beijing? Journal of Economic Perspectives, 9(3), 15-32.
17.
Garrett, G. (1998). Partisan politics in the global economy. Cambridge, UK: Cambridge University Press .
18.
Garrett, G., & Mitchell, D. (2001). Globalization, government spending and taxation in the OECD. European Journal of Political Research, 39, 145-177.
19.
Gottschalk, P., & Moffitt, R. (1994). The growth of earnings instability in the U.S. labor market. Brookings Papers on Economic Activity, 112, 217-272.
20.
Grieder, W. (1997). One world, ready or not. New York: Simon & Schuster.
21.
Hallerberg, M., & Basinger, S. (1998). Internationalization and changes in tax policy in OECD countries: The importance of domestic veto players. Comparative Political Studies, 31, 321-353.
22.
Hicks, A. (1999). Social democracy and welfare capitalism. Ithaca, NY: Cornell University Press.
23.
Hicks, A., & Zorn, C. (2005). Economic globalization, the macro economy, and reversals of welfare: Expansion in affluent democracies, 1978-94. International Organization, 59, 631-662.
24.
Huber, E., Ragin, C., Stephens, J., Brady, D., & Beckfield, J. (2004). Comparative welfare states dataset. Evanston, IL: Northwestern University, University of North Carolina, Duke University, and Indiana University.
25.
Huber, J., & Inglehart, R. (1995). Expert judgements of party space and party locations in 42 societies. Party Politics, 1(1), 73-111.
26.
IMF. (2005). International financial statistics. Geneva: Author .
27.
Iversen, T., & Cusack, T.R. (2000). The causes of welfare state expansion: Deindustrialization or globalization. World Politics, 52, 313-349.
28.
Katzenstein, P. (1985). Small states in world markets. Ithaca NY: Cornell University Press.
29.
Kautto, M. (2002). Investing in services in West European welfare states. Journal of European Social Policy, 12(1), 53-65.
30.
Kittel, B., & Winner, H. (2005). How reliable is pooled analysis in political economy? The globalization-welfare state nexus revisited. European Journal of Political Research, 44, 269-293.
31.
Korpi, W., & Palme, J. (2003). New politics and class politics in the context of austerity and globalization: Welfare state regress in 18 countries, 1975-95 . American Political Science Review, 97(3), 425-446.
32.
Laver, M., & Hunt, B. (1992). Policy and party competition. New York: Routledge.
33.
Lijphart, A. (1999). Patterns of democracy. Government forms and performance in thirty-six countries. New Haven, CT: Yale University Press.
34.
Pfaller, A., Gough, I., & Therborn, G. (1991). Can the welfare state compete?London: Macmillan.
35.
Pierson, P. (1996). The new politics of the welfare state. World Politics, 48(2), 143-179.
36.
Plumper, T., Troger, V., & Manow, P. (2005). Panel data analysis in comparative politics: Linking method to theory. European Journal of Political Research, 44(2), 327-354.
37.
Quinn, D. (1997). The correlates of changes in international financial regulation. American Political Science Review, 91, 531-552.
38.
Rieger, E., & Leibfried, S. (2003). Limits to globalization: Welfare states and the world economy. Malden, MA: Polity .
39.
Rodríguez, F., & Rodrik, D. (1999, April). Trade policy and economic growth: A skeptic's guide to the cross-national literature (Working Paper 7081). Cambridge, MA: National Bureau of Economic Research .
40.
Rodrik, D. (1997). Has globalization gone too far?Washington, DC: Institute for International Economics .
41.
Rodrik, D. (1998). Why do more open economies have bigger governments ? Journal of Political Economy, 106, 997-1032.
42.
Rodrik, D. (2000). Comments on "Trade, growth, and poverty," by D. Dollar and A. Kraay. Cambridge, MA: Harvard University.
43.
Ruggie, J.G. (1996). Globalization and the embedded liberalism compromise: The end of an era? (Working Paper 97/1). Cologne, Germany: Max Planck Institut für Gesellschaftsforschung.
44.
Scheve, K., & Slaughter, M.J. (2004). Economic insecurity and the globalization of production. American Journal of Political Science, 48(4), 662-674.
45.
Schmidt, S.R. (1999). Long-run trends in workers' beliefs about their own job security: Evidence from the general social survey. Journal of Labor Economics, 17(4), S127-S141.
46.
Steinmo, S. (1994). The end of redistribution? International pressures and domestic tax policy choices. Challenge, 37, 9-18.
47.
Strange, S. (1996). The retreat of the state: The diffusion of power in the world economy. New York: Cambridge University Press.
48.
Swank, D. (2002). Global capital, political institutions, and policy change in developed welfare states. New York: Cambridge University Press.
49.
Tsebelis, G. (1995). Decision making in political systems: Veto players in presidentialism, parliamentalism, multicameralism, and multipartyism. British Journal of Political Science, 25, 289-326.
50.
Tsebelis, G. (1999). Veto players and law production in parliamentary democracies: An empirical analysis. American Political Science Review, 93(3), 591-608.
51.
Tsebelis, G. (2002). Veto players: How political institutions work . Princeton, NJ: Princeton University Press.
52.
Tsebelis, G., & Chang, E.C. (2004). Veto players and the structure of budgets in advanced industrialized countries. European Journal of Political Research , 43(3), 449-476.
53.
Unctad (2005). Handbook of statistics [CD-ROM]. New York: United Nations.
54.
Wood, A. (1994). North-south trade, employment and inequality. Oxford, UK: Clarendon.
55.
World Bank. (2004). World development indicators [CD-ROM]. Washington, DC: Author.
