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Soc. Sci. 2015, 4(3), 700-717; doi:10.3390/socsci4030700

The Impact of Economic Globalization on the Employment Policies in 19 Western Democracies from 1985 to 2010. Limited Change or Radical Shift towards Workfare?

Department of Social Research, University of Turku, Assistentinkatu 7, Turku 20500, Finland
Academic Editor: Martin J. Bull
Received: 6 February 2015 / Revised: 4 September 2015 / Accepted: 10 September 2015 / Published: 15 September 2015
View Full-Text   |   Download PDF [726 KB, uploaded 15 September 2015]

Abstract

Among the most significant issues facing welfare states are the implications of economic globalization for employment policies. This issue is confronted from the viewpoint of workfarism, the incentives created by social policies for increasing participation in the labor market. To measure the limited changes involved, the analytical framework also includes institutional stickiness, pointing to the capability of welfare state institutions to resist external pressures. Panel data on capital flow, an active labor market policy (ALMP), and unemployment benefit (UB) expenditures in 19 welfare states between 1985 and 2010 are drawn from the Organisation for Economic Cooperation and Development (OECD) and the KOF Index of Globalization (KOF). The Vector Autoregressive Moving-Average model with exogenous regressors (VARMAX)-regression analysis found institutional stickiness to be a more significant factor than capital flow in 61% of the observations. The impact of capital flow was particularly significant in the United Kingdom, and in northern and continental Europe, and a tendency toward workfarism was detected in 37% of the welfare states. From a comparative perspective, the impact via the increased capital flow to workfare-related policies is a matter of contrasts rather than a unilateral phenomenon. View Full-Text
Keywords: economic globalization; employment policy; capital flow; VARMAX-model; workfare economic globalization; employment policy; capital flow; VARMAX-model; workfare
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Näätänen, A.-M. The Impact of Economic Globalization on the Employment Policies in 19 Western Democracies from 1985 to 2010. Limited Change or Radical Shift towards Workfare? Soc. Sci. 2015, 4, 700-717.

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