Convergence or divergence?: change in welfare effort in OECD countries 1960–1980

Abstract. This paper examines changes in welfare effort from 1960 to 1980 and two intervening periods. Analysis of data on 17 OECD countries indicates that there is increasing divergence in welfare effort, as reflected in expenditure and policy orientation, although this statement masks important nuances relating to measures of welfare effort and time periods. The findings illustrate the importance of considering the elements of welfare effort. The patterns of variation in social transfer and government civil consumption expenditure differ as do the explanations of these patterns particularly those relating to the impact of working class mobilisation variables. These variables are positively and relatively strongly associated with change in consumption expenditure in both the 1960–73 and 1973–80 periods but only weakly associated with change in social transfer expenditure. This has implications for findings relating to the widely used ILO measure of welfare effort. Since it is skewed towards social transfer payments and includes only a small part of consumption expenditure, the impact of working class mobilization variables is not evident. Finally, the standardization of change in welfare effort for average annual change in real GDP results in interesting insights relating to the impact of independent variables on 'real' as opposed to nominal change in welfare effort.