Political parties as drivers of post-crisis social spending in liberal welfare states

Abstract:

In the aftermath of the global economic crisis, the challenges facing welfare states are unprecedented. While government leaders have been in broad agreement that the severity of the recession called for decisive actions to limit the costs of the crisis, national responses have differed significantly.

This article seeks to explain these divergent patterns and answer the critical question: how has the crisis affected the politics of social spending across liberal welfare states? While political conflict over social spending may increase across all countries in the wake of an economic crises, partisanship is expected to have a stronger effect in liberal welfare states, due to weak automatic stabilizer effects and a reliance on discretionary spending.

This research tests the effects of political parties on social spending across nine liberal welfare states (Australia, Canada, Ireland, Japan, New Zealand, South Korea, Switzerland, the UK, and the USA) during the pre-crisis (1990–2007) and post-crisis (2008–2013) periods. It also provides in-depth analysis of the USA and the UK, two representative liberal welfare states who adopted highly dissimilar post-crisis social spending.

The findings demonstrate that while political parties were not correlated with social spending during the pre-crisis period, after the global economic crisis they were significant in influencing social spending levels. This indicates an important shift in political dynamics across liberal welfare states over time that has not been fully accounted for by the existing literature.