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The Impact of Economic Globalization on the Employment Policies in 19 Western Democracies from 1985 to 2010. Limited Change or Radical Shift towards Workfare?

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  • Ari-Matti Näätänen

    () (Department of Social Research, University of Turku, Assistentinkatu 7, Turku 20500, Finland)

Abstract

Among the most significant issues facing welfare states are the implications of economic globalization for employment policies. This issue is confronted from the viewpoint of workfarism, the incentives created by social policies for increasing participation in the labor market. To measure the limited changes involved, the analytical framework also includes institutional stickiness, pointing to the capability of welfare state institutions to resist external pressures. Panel data on capital flow, an active labor market policy (ALMP), and unemployment benefit (UB) expenditures in 19 welfare states between 1985 and 2010 are drawn from the Organisation for Economic Cooperation and Development (OECD) and the KOF Index of Globalization (KOF). The Vector Autoregressive Moving-Average model with exogenous regressors (VARMAX)-regression analysis found institutional stickiness to be a more significant factor than capital flow in 61% of the observations. The impact of capital flow was particularly significant in the United Kingdom, and in northern and continental Europe, and a tendency toward workfarism was detected in 37% of the welfare states. From a comparative perspective, the impact via the increased capital flow to workfare-related policies is a matter of contrasts rather than a unilateral phenomenon.

Suggested Citation

  • Ari-Matti Näätänen, 2015. "The Impact of Economic Globalization on the Employment Policies in 19 Western Democracies from 1985 to 2010. Limited Change or Radical Shift towards Workfare?," Social Sciences, MDPI, Open Access Journal, vol. 4(3), pages 1-18, September.
  • Handle: RePEc:gam:jscscx:v:4:y:2015:i:3:p:700-717:d:55790
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    References listed on IDEAS

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    1. Mariam Camarero & Josep Lluís Carrion-i-Silvestre & Cecilio Tamarit, 2006. "Testing for Hysteresis in Unemployment in OECD Countries: New Evidence using Stationarity Panel Tests with Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(2), pages 167-182, April.
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    More about this item

    Keywords

    economic globalization; employment policy; capital flow; VARMAX-model; workfare;

    JEL classification:

    • A - General Economics and Teaching
    • B - Schools of Economic Thought and Methodology
    • N - Economic History
    • P - Economic Systems
    • Y80 - Miscellaneous Categories - - Related Disciplines - - - Related Disciplines
    • Z00 - Other Special Topics - - General - - - General

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