What's left of the left? Partisanship and the political economy of labour market reform: why has the social democratic party in Germany liberalised labour markets?
AbstractThe German social democratic party initiated in 2003 the greatest overhaul of labour market legislation in decades, severely cutting unemployment benefits and slashing employment protection legislation. How can we explain this radical policy shift? This paper will present a counter-intuitive answer, arguing that the SPD implemented the reforms because of electoral interests. The rationale is two-fold and relates to changes in labour market policy supply and policy demand. First, the German social democrats strategically adjusted their labour market policy supply, seeking to maximise their office pay-offs by appealing to the median voter in a competitive political space. Second, the shift in policy-supply is also a reaction to changes in labour market policy-demand, with crucial segments of the electorate turning more favourably to welfare state retrenchment. This shift disproportionally benefited the conservative CDU and liberal FDP and forced the SPD to reposition itself in the party landscape.
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Bibliographic InfoPaper provided by London School of Economics / European Institute in its series Europe in Question Discussion Paper Series of the London School of Economics (LEQs) with number 5.
Date of creation: 16 Jul 2013
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Web page: http://www2.lse.ac.uk/europeanInstitute
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-28 (All new papers)
- NEP-CDM-2013-07-28 (Collective Decision-Making)
- NEP-LAB-2013-07-28 (Labour Economics)
- NEP-POL-2013-07-28 (Positive Political Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
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