The Globalization-Welfare State Nexus Reconsidered

S. Meinhard and Niklas Potrafke

Munich Reprints in Economics from University of Munich, Department of Economics

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.

Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (62)

Published in Review of International Economics 2 20(2012): pp. 271-287

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: The Globalization–Welfare State Nexus Reconsidered (2012)
Working Paper: The Globalization-welfare State Nexus Reconsidered (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:19212

Access Statistics for this paper

More papers in Munich Reprints in Economics from University of Munich, Department of Economics Ludwigstr. 28, 80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Tamilla Benkelberg ().