The Globalization-Welfare State Nexus Reconsidered

Meinhard, S. und Potrafke, Niklas (2012): The Globalization-Welfare State Nexus Reconsidered. In: Review of International Economics, Bd. 20, Nr. 2: S. 271-287

Abstract

Two hypotheses relate to the globalization-welfare state nexus: the efficiency hypothesis predicts that globalization reduces government sector size and governments’ capacity to finance the welfare state. The compensation hypothesis, in contrast, predicts that globalization induces a higher demand for social insurance which results in an extended welfare state. Empirical evidence on the globalization-welfare state nexus is mixed. The evidence is re-examined by investigating a yearly panel dataset of 186 countries for the 1970-2004 period. This paper uses data compiled by the Penn World Tables on government sector size and employs the Konjunkturforschungsstelle (KOF-Swiss Economic Institute) index of globalization. The results show that globalization increased government sectors around the world. Social globalization especially had a positive influence. Globalization-induced effects were stronger in Organisation for Economic Co-operation and Development (OECD) countries. Overall globalization and economic globalization reduced the relative price of government expenditures. These findings suggest that globalization does not jeopardize the welfare state at all.

• Dokumententyp: Zeitschriftenartikel
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Lehrstühle > CESifo-Professur für Volkswirtschaftslehre
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• Sprache: Englisch