Chapter 22: The impact of public policies by Jørgen Goul Andersen Caramani (ed.) Comparative...

Chapter 22:

The impact of public policiesby Jørgen Goul Andersen

Caramani (ed.) Comparative Politics

Section V: Public policies

Chapter 22: The impact of public policies

Introduction (1/1)

Introduction

Economic paradigms and approaches to welfare

Welfare regimes, varieties of capitalism, and flexicurity

Tensions between welfare and economic efficiency

Policy feedback and path dependence

CP has increasingly turned attention from “output” to “outcomes”.

This chapter deals with the economic and social effects of public

policies.

The relationship between politics and the economy is of special interest.

One of the most important aspects – and one of the most controversial –

is the impact of welfare policies on the economy.


Welfare regimes, varieties of

capitalism, and flexicurity (1/6)

Introduction





The political science perspective on the impact of public policies usually

refers to a concept of an “ideal type”. The two most known concepts are:

The concept of welfare regimes (Esping-Andersen 1990): - Welfare states are the result of political conflicts

The concept of varieties of capitalism:- Welfare states are the result of a common interest between

employers and workers- Functionalist approach




Introduction





The concept of welfare regimes (Esping-Andersen 1990):

(1) Conservative welfare regime:- Aim of securing income replacement. Security > equality.- Payments dependent on contribution records- Low women labour force participation

(2) Liberal welfare regime:- Aim of supporting the ones in need and alleviating poverty- Coverage is for all citizens- Less disturbing labour-markets effects




Introduction





The concept of welfare regimes (continued)

(3) Social democratic welfare regime:- Aim of maintaining the standard of living- Granted regardless of employment record- Favourable to female labour force participation




Introduction





Varieties of capitalism:

The concept of varieties of capitalism refers to different methods of

coordination within an economy.

Liberal market economies (LMEs):

- Develop competitive advantages in “radical innovation”

- General skills of labour force

Coordinated market economies (CMEs):- Develop competitive advantages in company specific skills- Highly skilled and strongly specialized labour force




Introduction





Varieties of capitalism (continued)

Welfare states are efficient because they help to develop competitive

advantages which make for economic performance.

Workers are only willing to invest in specialized skills if they have an

insurance against losing their job comparative institutional advantage

of welfare states.




Introduction





Flexicurity (= combination of flexibility and security)

The concept of flexicurity refers to a particular, successful hybrid between

liberal (LMEs) and coordinated market economies (CMEs).

Flexicurity is characterized by a combination of the “golden triangle”:

(1) Liberal employment protection legislation

(2) Generous employment compensation

(3) Active labour market policies


Tensions between welfare and

economic efficiency (1/5)

Introduction





Social and economic impact of welfare regimes:

Social impact:

With respect to equality and poverty reduction, there seems to be a

rank order with social democratic regimes first and liberal regimes last.

Social democratic regimes also perform best with respect to social

integration, stability in life and social capital.

Economic impact:

With respect to economic performance measured in labour market

integration, liberal regimes perform better.




Introduction





Tax/welfare system and economic efficiency:

To what extent do taxes and transfers harm economic efficiency (Okun’s

thesis)?

Empirical analysis shows: No correlation between the level of social expenditure and the GDP-

level No correlation between equality and economic performance

There is only little evidence of welfare states having adverse effects on

economic growth.




Introduction





Impact of labour market policies and institutions:

The paradigmatic change from Keynesian to supply-side economics was

due to a reinterpretation of unemployment structural unemployment

Theoretical explanations of structural unemployment:• High minimum wages• Wrong incentives• Insider-outsider problem• Insufficient geographic mobility




Introduction





Impact of labour market policies and institutions (continued)

Results of empirical analysis:

Unemployment protection:- Duration of unemployment benefits have adverse effects on

duration rates and proportions of long-term unemployment

Minimum wages:- No correlation between the level of minimum wages and the level

of employment

Taxation:- Some contested evidence that targeted reductions in taxes may

have an effect on unemployment




Introduction





Impact of labour market policies and institutions (continued)

Activation:- Only small effects compared to costs

Corporatism:- Unorganized labour: Beneficial impact on unemployment- Sectoral bargaining: Detrimental effects on unemployment- Centralized wage coordination: Beneficial impact on

unemployment


Policy feedback

and path dependence (1/4)

Introduction





Policy feedbacks on politics:

Policies have an impact on interest-constellations in society:- Formation of new interest groups - Interest in maintaining particular programs (vested interest)- Influence on power distribution in society- Creating divisions of interests as well as unity of interests- Opening/closing of access opportunities

.. which again influences policies in the future.


Policy feedback


Introduction





Policy learning is another form of policy feedback:

Policy learning: The process by which civil servants, policy experts,

and elected officials evaluate the performance of previously enacted

policies.

Policy learning takes place within a paradigm, but even paradigm shifts

may be ascribed to learning.


Policy feedback


Introduction





Policy transfer and policy diffusion are further policy feedback

mechanisms:

Policy transfer: Deliberated across national/sectoral policy learning

Policy diffusion: Broader concept than policy transfer. It refers to all

conceivable channels of influence between countries

Policy convergence is not only a result from “functional necessity”, but

also from policy transfer and –diffusion.

Policy transfer and diffusion are serious disturbances in cross-national

research.


Policy feedback


Introduction





Path dependence:

Path dependence: Policies at one point of time impact policies at a

later point of time.

Path dependence occurs because of political or administrative switching

costs.

There are several lines of interpretation of path dependence:• Lock in effects• Positive feedbacks• Path dependence as a perspective

Path dependence is one of the main explanations of continuing cross

national-differences in politics.

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