Globalization and Welfare Compensation: Disentangling the Ties that Bind

Abstract

Three perspectives dominate debate over the relationship between globalization and the welfare state in industrialized countries: that globalization constrains the welfare that hitherto legitimated openness, that globalization still sparks demands for welfare while opening few forces to flee or fight against it, and that openness has little effect on welfare. A closer look at the “globalization” and “welfare” aggregates on which most scholars focus, however, reveals varying politics connecting different elements of globalization and welfare that may help reconcile this debate. First, compared to general trade openness, low-wage competition may spark stronger pressure to expand and less pressure to constrain welfare compensation. Second, all kinds of openness affect vulnerable and thriving groups in ways that differ across social policies, especially training and relocation benefits compared to benefits for youth dependents and the elderly. Consequently, different faces of openness may spark predictably different politics that spur some aspects of welfare, retrench others, and have little effect on still others. Panel data for eighteen OECD countries supports this argument.