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Political parties, institutions, and the dynamics of social expenditure in times of austerity

Listed author(s):
  • Kittel, Bernhard
  • Obinger, Herbert

The containment of social expenditure growth has been (and still is) a core issue of public policy in advanced industrial countries since the 1980s and has received much academic attention during that period. Among the most extensively discussed explanatory factors of social expenditure are partisan politics and political institutions, as well as the dependency of the real impact of the former on the latter. The paper distinguishes five competing theoretical perspectives and explores their power to explain the empirical variation in the period 1982-1997 in 21 OECD countries. The empirical analysis of short-term dynamics is performed in a time-series cross-section framework while long-term level effects are explored in a cross-sectional setting. By using an interactive model specification the authors show that there is empirical evidence for this conditional effect, albeit it is neither thoroughly convincing nor leading to lasting long-term level effects. Extensive specification tests show that the 1990s witnessed a weakening of partisan effects which were still present in the 1980s. In total, the evidence tends to give most support to the growth-to-limits and the new politics perspectives.

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File URL: https://www.econstor.eu/bitstream/10419/44246/1/645083739.pdf
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Paper provided by Max Planck Institute for the Study of Societies in its series MPIfG Discussion Paper with number 02/1.

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Date of creation: 2002
Handle: RePEc:zbw:mpifgd:021
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  1. Hansen, Paul & King, Alan, 1998. "Health care expenditure and GDP: panel data unit root test results--comment," Journal of Health Economics, Elsevier, vol. 17(3), pages 377-381, June.
  2. McCoskey, Suzanne K. & Selden, Thomas M., 1998. "Health care expenditures and GDP: panel data unit root test results," Journal of Health Economics, Elsevier, vol. 17(3), pages 369-376, June.
  3. Hans-Werner Sinn, 2002. "Der neue Systemwettbewerb," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(4), pages 391-407, November.
  4. Kemmerling, Achim, 2001. "Die Messung des Sozialstaates: Beschäftigungspolitische Unterschiede zwischen Brutto- und Nettosozialleistungsquote," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 01-201, Social Science Research Center Berlin (WZB).
  5. Overbye, Einar, 1995. "Explaining Welfare Spending," Public Choice, Springer, vol. 83(3-4), pages 313-335, June.
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