Retirement income security in the United Kingdom.

This article examines the U.K. retirement income security system from the American perspective. It addresses issues that most concern U.S. analysts: how the United Kingdom has kept its future public pension costs at a manageable level, the extent to which privatization of public pensions has contributed to low pension costs, the popular appeal of individual pension accounts, and the impact of privatization on retirement income. These issues are best understood in the context of the U.K. pension program's particular institutional structure and policies, two of which--"contracting out" of public pensions, and strong reliance on means-tested benefits--have been largely rejected in the evolution of U.S. policy to date. Particular use is made of recently available data on coverage rates for public and private pension programs over the total working population and administrative records on inactive personal pension accounts.     

The Political Economy of Gender: Explaining Cross-National Variation in the Gender Division of Labor and the Gender Voting Gap

Mainstream political economy has tended to treat the family as a unit when examining the distributional consequences of labor market institutions and of public policy. In a world with high divorce rates, we argue that this simplification is more likely to obscure than to instruct. We find that labor market opportunities for women, which vary systematically with the position of countries in the international division of labor and with the structure of the welfare state, affect women's bargaining power within the family and as a result, can explain much of the cross country variation in the gender division of labor as well as the gender gap in political preferences.     

From Safety Net To Trampoline: Labor Market Activation in the Netherlands and Denmark

In recent years Denmark and the Netherlands have made dramatic shifts from passive to active labor market policies. Though often portrayed as a necessary response to high levels of structural unemployment, such changes are more than a mere technical adjustment of welfare programs to a changing economic climate. They represent new ideas about the goals of public policy and the social rights of citizenship. This article surveys the politics of labor market policies in the two countries to demonstrate that the recent activation programs reflect a departure from the ideas and goals of the postwar welfare state.     

Promotion Tournament,Labor Market Tightening and Pension Generosity: A Comparative Public Policy Analysis of Pension System for Urban Workers in China (1997–2013)

Abstract

This article conducts a comparative public policy analysis of China’s generous urban worker basic pension system. It is commonly believed that Chinese local governments, which are motived by office-seeking incentives under decentralization, may foster economic growth at the expense of citizens’ social rights and thus “promotion tournament competition” comes into being. This article challenges this view by arguing that such competition can increase the generosity of social programs such as public pensions, especially in the condition of labor scarcity. This argument is supported by time-series cross-section analysis of 31 Chinese provincial units (1997–2013) using a novel indicator of the intensity of inter-locality competition. When the labor market tightens, workers can leave a locality to seek better compensation. Motivated by the promotion tournament competition to develop the local economy, which requires the issue of labor shortage to be addressed, local governments then provide generous local pension schemes to retain workers. Operating in a macroeconomic climate of labor scarcity, promotion tournament competition becomes an unlikely catalyst for welfare expansion in China.     

Economic Crisis and Institutional Resilience: The Political Economy of Migrant Incorporation

This article focuses on the situation of migrants and their descendants in European labour markets. This important socioeconomic dimension of the current crisis illuminates the role of pre-existing policies and institutions and points the way to political solutions. The article begins with a comparative puzzle: how can one account for cross-national, cross-local, and cross-sectoral variation in the labour market outcomes of migrant-origin minority groups and explain migrant-origin and gender differences. This is followed by a critical examination of debates on the ‘integration’ of migrants and the ‘second generation’ reflecting political diatribes on the across-the-board poor performance of minorities and the role of ethnic or religious factors. An alternative explanation underscores the importance of policy paradigms and institutional hurdles focusing on three aspects of European political economies: welfare state arrangements, education, and sub-national labour market policies. The arguments put forth rely on comparative aggregate data and surveys in countries representative of ideal types according to the original version of the varieties of capitalism, worlds of welfare, and integration models literature, in particular France, Germany, Sweden, and the Netherlands.     

Policy convergence and policy feedback: Agricultural finance policies in a globalizing era

In a comparative study of five countries: Australia, Canada, the Republic of Ireland, the UK, and the USA, this article examines the degree of convergence of agricultural credit policy content, policy instruments, and policy outcomes on a market liberal model. It shows that all five countries have moved toward market liberal policy arrangements over the past quarter century of globalizing and domestic fiscal pressures, but important differences in policy remain. The Republic of Ireland and the United Kingdom move further toward a market liberal model than do Australia, Canada, and the USA. The distinct national paths taken to market liberalism give rise to policy feedback that hastens or retards the adoption of a fully market liberal system. Historical choices of policy instruments and path dependence help account for continuing policy divergence.     

Policy convergence and policy feedback: Agricultural finance policies in a globalizing era

Abstract In a comparative study of five countries: Australia, Canada, the Republic of Ireland, the UK, and the USA, this article examines the degree of convergence of agricultural credit policy content, policy instruments, and policy outcomes on a market liberal model. It shows that all five countries have moved toward market liberal policy arrangements over the past quarter century of globalizing and domestic fiscal pressures, but important differences in policy remain. The Republic of Ireland and the United Kingdom move further toward a market liberal model than do Australia, Canada, and the USA. The distinct national paths taken to market liberalism give rise to policy feedback that hastens or retards the adoption of a fully market liberal system. Historical choices of policy instruments and path dependence help account for continuing policy divergence.     

The Politics of Occupational Pension Reform in Britain and the Netherlands: The Power of Market Discipline in Liberal and Corporatist Regimes

The politics of occupational pension reform has attracted less attention than state pension retrenchment. Yet, in countries with large occupational welfare sectors changes in company provision can be equally important for welfare system generosity. This paper compares recent occupational pension developments in the Netherlands and Britain, exemplars of coordinated and liberal capitalism. The paper argues that despite regime-typical differences in the nature and process of change, recent developments have also been remarkably similar. In both countries retrenchment and individualisation has left most citizens at risk of being less well off in retirement. Corporatist governance in the Netherlands has not challenged the overall orientation of this process, but has merely distributed the costs of retrenchment more fairly than liberal Britain. Instead, the constraints of the globalised financial market directed change: exposure to market discipline, reinforced by national policy actors and international market regulators, made occupational provision vulnerable to retrenchment regardless of regime type. Thus, the significance for levels of social protection of differences between liberal and corporatist governance models of occupational pensions may have been overrated.     

The Welfare State as Rational Choice: Social Democracy in a Post-Socialist World

In this article* it is argued that rational choice analysis can help explain social democratic welfare states (SDWS). It explores the common ground between the methodological individualism of rational choice political economy and the "U-shaped curve" central to neocorporatist analysis, the idea of a curvilinear relationship between the level of corporatism in institutional arrangements and societal welfare. Central to the SDWS, it is suggested, is the reduction of information costs due to the configuration of institutional arragements in three key arenas of social action in the SDWS: the informational-cultural; the organizational-economic; and the governmental-political. These arrangements frame the choices under which rational individuals act to maintain the SDWS and the outcomes it produces. Concrete examples demonstrating the usefulness of the approach are offered in terms of explaining differences in policy choices (and therefore outcomes) between the Scandinavian countries and more laissez-faire systems such as the US. The conclusion looks at the prospects for the SDWS, asking just how the institutional arrangements central to the SDWS are being challenged by recent developments.     

The privatisation of welfare: The impact of parties on the private/public mix in pension provision

The Conservative governments of 1979–95 have encouraged private sector pension provision to the extent that it covers two‐thirds of the British workforce. It is now possible to consider moving from the universal system of state provision laid down in the Beveridge scheme to a targeted system. Indeed, it has been suggested that the basic state pension should be abolished. However, if we consider the policy initiatives of the 1980s it would not seem that Conservative policy differs markedly from the policies pursued by the Conservative Party in the 1960s and 1970s. Indeed, there are also some similarities with the Labour Party policy. In this sense the case of pensions would appear to support the view that Thatcherism was less radical than has been generally claimed and represents a continuation of past policy. However, if we employ models of welfare state development to analyse policy outcomes we can demonstrate how the cumulative effect of individual policies pursued by the Conservatives has led to a change in the character of the British welfare state and thus the continuities with past policy may be deceptive.     

An Options Pricing Method for Calculating the Market Price of Public Sector Pension Liabilities

State and local public sector employee pensions are widely known to be underfunded, but pension financial reports do not reveal the true extent of funding shortfalls. Pension accounting methods assume that plan investments can earn high returns without taking any account of the market risk involved. This gives a false sense of the financial strength of public sector pensions and understates risks to taxpayers. Since accrued pension benefits are legally and constitutionally protected, any pension funding shortfalls must be met by taxpayers. This benefit guarantee amounts to an effective put option on plan investments, the cost of which is not disclosed under current actuarial accounting. This paper uses an options pricing method to calculate the market value of taxpayer guarantees underlying public sector pensions. The average funding ratio declines from 83 percent under actuarial accounting to 45 percent under this options pricing approach. The typical state has unfunded public pension liabilities three times larger than its explicit government debt. Public pension shortfalls equal an average of 27 percent of state gross domestic product, posing a significant fiscal challenge in coming years. Accurate measures of public pension liabilities are important for policy makers, taxpayers, investors considering the economic environment in which to start or locate a business, and bond purchasers considering the risk premia appropriate to municipal government bonds that are in practice subordinate to public pension liabilities.     

Housing and the Welfare State in Norway

This article discusses housing and the welfare state in Norway in 1980 and 2005 by applying Esping‐Andersen's theories of welfare state regimes to this sector. How should Norwegian housing policy be understood in light of Esping‐Andersen's conceptual framework, and what is the impact of post‐industrial change? In 1980, Norwegian housing policy was mainly characterised by social‐democratic traits such as market regulation, substantial public expenditure and universal subsidies for both renters and a large owner‐occupied housing sector. The effects of post‐industrial changes, including deregulation of the credit and housing markets, marked a major turn in housing policy and the housing market in Norway. By 2005, Norwegian housing policy was mainly characterised by traits that are typical of a liberal welfare regime: market economics, low public expenditure and subsidies for small, targeted groups, while other segments of the Norwegian welfare state remain characterised by social‐democratic traits. Esping‐Andersen's claim that the effect of post‐industrial transformation was different in different welfare regimes is thus not supported by the case of the Norwegian housing sector.     

The Future of Public Sector Pensions

The dramatic rise in life expectancy and longer retirement has created serious concerns about the long‐term affordability of public sector pensions. Drawing on insights from a recent inquiry into public sector pension reform, commissioned by the Conservative–Liberal Democrat Coalition and led by the author, this article outlines the challenge faced by policy makers and sets out how it should be addressed. It argues that, with 12 million people active in this part of the pensions system, and estimates that the gap between contributions and payments will grow from £3bn to £10bn in the next decade, the government has no choice but to enter the ‘lions’ den’ of pensions’ policy. It contends that any long‐term solution is to be crafted cannot be based solely on economics, but must also answer fundamental questions of ethics and equity.     

Divided by the Market,Divided by the State: Distribution,Redistribution and Welfare Attitudes in 47 Countries

This article examines the impact of income inequality and welfare state context on the extent to which the rich and poor share similar attitudes towards redistribution. It asks whether and how differences in attitudes, particularly those between income groups, are shaped by inequality and redistributive efforts. Based on a multi‐level analysis of individual survey data across 47 countries at three points in time, the article shows that such an interaction of individual characteristics and the macro‐context indeed matters considerably. While material self‐interest, unsurprisingly, explains part of the individual differences, the analysis also shows, for the first time, that both high inequality and strongly redistributive policies divide public opinion along the lines of socioeconomic position. Put differently, while market inequality may be associated with less cohesive attitudes, a highly redistributive welfare state does not seem to foster agreement among the public, either. These findings have important policy implications for advanced welfare states, including a renewed emphasis on ‘predistribution’ (i.e., policies that influence the primary distribution of income) in order to avoid the scenario of intensified redistributive conflicts.     

Frontiers of social policy in Europe and America

The cumulative growth of social programs and public income distribution is leading to a grave need for policy harmonization, i.e., efforts to take into account interdependencies across formerly distinct areas of public and private activity. This need is particularly severe with regard to income support programs, labor market relations and taxation systems. While any fundamental backlash against the welfare state is unlikely, so too is any comprehensive solution through negative income taxation or other abstract forms of economic planning. Prospects for coping with problems of policy harmonization differ among nations, but all countries face the challenge of building consensus around noneconomic values lying at the heart of social policy. Without this cushion of legitimacy, increased policy complexity and higher public expectations threaten to overwhelm democratic political systems.     

Pathways to work for low‐income workers: The effect of work in the temporary help industry

This paper provides new evidence to inform the policy debate about the effect of a newly important industry—the temporary help industry—on the labor market outcomes of low‐income workers and those workers who are at risk of being on public assistance. The core issue of whether temporary help work harms the long‐term prospects of disadvantaged individuals depends critically on the alternatives available to the worker. Temporary employment results in labor market outcomes that are better than not working at all. For example, while nonemployed public assistance recipients have only a 35 percent chance of being employed a year later, those who were in temporary employment have almost twice the likelihood of being employed in the same period. These findings, if correct, would support the use of temporary agencies by welfare programs. © 2003 by the Association for Public Policy Analysis and Management     

Morbid obesity and the transition from welfare to work.

This paper utilizes a rich longitudinal data set--the Women's Employment Study (WES)--to investigate whether obesity, which is common among women of low socioeconomic status, is a barrier to employment and earnings for current and former welfare recipients. We find that former welfare recipients who are both White and morbidly obese have been less successful in transitioning from welfare to work. These women are less likely to work at any survey wave, spend a greater percentage of months between waves receiving cash welfare, and have lower monthly earnings at each wave. The magnitude of the difference in labor market outcomes between the morbidly obese and those who are less heavy is in some cases similar in magnitude to the differences in these labor market outcomes between high school dropouts and graduates. In contrast, we find no such labor market differences associated with morbid obesity for African-American respondents. This paper documents the relationship between weight and labor market outcomes for the first time among the welfare population. In addition, it investigates whether the correlation for White females is due to unobserved heterogeneity. We find that after controlling for individual fixed effects, the point estimate of the correlation of morbid obesity and each of the labor market outcomes falls considerably and is no longer statistically significant. These results are consistent with unobserved heterogeneity causing the correlation between morbid obesity and labor market outcomes. Findings are similar after controlling for the respondent's mental and physical health.     

Policy reform and the decline of corporatism in Sweden

This article describes the development of corporatism in Sweden from the 1970s onwards. We demonstrate that the Swedish case differs a great deal from other small European countries, such as the Netherlands and Sweden's neighbour Denmark, where corporatism is alive and well and often credited with providing for economic success in recent years. We study corporatism indirectly rather than directly, in the sense that we start from public policy changes in labour market policy, pensions, and immigrant policy, and follow the policy-making chain backwards in order to identify the norms, institutions, and actors that have mattered for policy choices, and how they mattered. Our conclusion is that Sweden has not only experienced decorporatisation in terms of formal institutional changes, but also in terms of a decline in the norms regarding social partnership that previously guided policy making and the interaction of interest organisations.     

Policy planning and management dialogue with countries in transition

The economic and social transformation of the socialist state is a central concern of public policy planning. This article discusses three aspects of this challenge: the growth of policy interventions in the welfare state; modalities of public policies; and the organization of public policy planning. Modernization of public management in the west underscores the respective rationalities of state and market. The modern welfare state is now under financial pressure, cutbacks proceed and privatization and deregulation take hold. The author appraises these trends and their implications for countries in transition. Emphasis is placed on the need to demarcate public and private whilst at the same time building in social protection through public participation in policy planning.     

The Bio-economy and the Competition State: Transcending the Dichotomy between Coordinated and Liberal Market Economies

This article examines the role of the state in the emerging bio-economy. The starting point is that state interventions, including supportive regulatory arrangements and the shaping of public attitudes, constitute core assets in the evolution of bio-industrial complexes. Public policy in the bio-economy, across advanced industrial countries, is well captured by the “competition state” concept. This type of state takes different forms, analogously with the historical variants of the Keynesian welfare state. The article compares patterns of governance of the biotechnology sector in Finland and Sweden, the USA and the UK, and Australia. It is concluded that the bio-industry sector does not fit with the “models of capitalism” paradigm which postulates coherence within, and systemic divergences between, national models of economic governance. The bio-economy displays trends toward convergence, in particular mounting public investments in health care and in research and development. On the other hand, countries differ in their approach to market regulation, industrial support, and ethical restrictions. These differences do not follow the dichotomy between “liberal” and “coordinated” models of capitalism.