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Left Government, Policy, and Corporatism: Explaining the Influence of Partisanship on Inequality

Published online by Cambridge University Press:  13 June 2011

David Rueda
David Rueda
Affiliation:
Oxford University, [email protected].
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Abstract

The author argues that to understand the relationship between partisan government and equality two fundamental things need to be done: separate the effects of partisanship on policy and of policy on the economy; and assess the influence of government partisanship once the mediating role of corporatism is accounted for. The main goal of this article is to explore the relationship between government partisanship, policy, and inequality at the lower half of the wage distribution. The analysis is motivated by a puzzling finding in previous work: the absence of government partisanship effects on earnings inequality. The author focuses on the role of three different policies: government employment, the generosity of the welfare state, and minimum wages. The results show that government employment is a most significant determinant of inequality (although it is affected by left government only when corporatism is low). They also demonstrate that welfare state generosity does not affect inequality and, in turn, is not associated with left government. Finally, they reveal that the effect of government partisanship on minimum wages and of minimum wages on inequality is completely conditional on the levels of corporatism (these effects are only present when corporatism is low). The author explains why specific policies do or do not affect earnings inequality and also why corporatism mitigates or magnifies the influence of government partisanship. By explicitly exploring the determinants of policy and earnings inequality, the article represents an important contribution to our understanding of how governments can promote redistribution.

Type
Research Article
Information
World Politics , Volume 60 , Issue 3 , April 2008 , pp. 349 - 389
Copyright
Copyright © Trustees of Princeton University 2008

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References

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14 I ran the regressions without a constant.

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24 Ibid., 417

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49 Gabel and Huber (fn. 46). The measure I use is in fact very highly correlated with Cusack's (fn. 12) more commonly used cabinet partisanship variable (with is based in expert opinions).

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58 For a more detailed explanation, see Dolado et al. (fn. 37); and OECD (fn. 38).

59 See Appendix 1 for details.

60 The countries are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Sweden, Switzerland, the U.K., and the U.S. In the regressions for the determinants of government employment and welfare state generosity, data are missing ; for Australia (1992–95), Switzerland (1973 and 1974), and Belgium (1995, but only for the government employment regression). In the regressions for the determinants of minimum wages data for Switzerland are missing. Finally, the lack of availability of OECD inequality data imposes more limitations in our analysis of the determinants of 50–10 ratios. In these regressions data for Switzerland are again missing (since minimum wages are now an explanatory variable), as well as for the year 1995 (for all countries), Australia (1973–75), Belgium (1973–84), Canada (1974–80), Denmark (1973–79), Finland (1973–76), Germany (1973–83), Italy (1973–85), Japan (1973 and 1974), the Netherlands (1973–76), Norway (1973–89, 1994, and 1995), and Sweden (1972–74).

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78 The same increase in a country with high corporatism would promote a similar although less substantial decrease in inequality, but, as mentioned above, left government is not associated with more government employment in these countries.

79 It is important to point out, however, that this is not an ideal measure of welfare state generosity for testing an insider-outsider argument. The variable capturing social transfers in this analysis is too aggregate and it includes portions (like old-age benefits) that would mostly benefit insiders.

80 Results available from the author.

81 It could be argued that governments influence the minimum wage even if they do not set a statutory level and that they can influence the wage demands of social partners. The analysis above is reproduced with a dependent variable reflecting minimum wages (whether statutory or the result of collective bargaining) as a percentage of average wages. They confirm the results discussed in this section.

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83 Results available from author.

84 Results available from author.

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95 Ibid.; Dolado et al. (fn. 37); OECD (fn. 38).

96 Armingeon et al. (fn. 90).

97 Robert Franzese, “The Political Economy of Public Debt: An Empirical Examination of the OECD Postwar Experience” (Paper presented at the Wallis Conference on Political Economy, Northwestern University, Chicago, 1998).