Welfare-State Regress in Western Europe: Politics, Institutions, Globalization, and

Europeanization
Author(s): Walter Korpi
Source: Annual Review of Sociology, Vol. 29 (2003), pp. 589-609
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 Annu.Rev.Sociol.2003.29:589-609
doi:10.1146/annurev.soc.29.010202.095943
Copyright® 2003by AnnualReviews.Allrightsreserved
onlineas a Reviewin AdvanceonJune4, 2003
Firstpublished

WELFARE-STATE IN WESTERNEUROPE:
REGRESS
Politics,Institutions,Globalization,
and Europeanization

WalterKorpi
SwedishInstitutefor Social Research,StockholmUniversity,106 91 Stockholm,Sweden;
email: walter.korpi@sofi.su.se

Key Words welfare-stateretrenchment,

globalization,E.U., partisanpolitics,
unemployment
* Abstract The"new-politics" perspectivederiveswelfarestateretrenchmentfrom
postindustrialchangesgeneratingbudgetdeficitsandgovernmentattemptsto benefit
cuts, attemptslargelyresistedby powerfulnew groupsof welfare-stateclients.Com-
parativestudiesbased on social expendituresshow little or no role of class-based
partiesin the retrenchment process.In the power-resources perspective,focusingon
therole of distributiveconflictsbetweenmajorinterestgroups,the post-warEuropean
welfarestateincludedfull employmentin the "Keynesianwelfarestate,"basedon a
social contractmarkedlydifferingfrom the one in the United States.The returnof
massunemployment in Europeconstitutesa majorwelfarestateregressandgenerates
governmentbudgetdeficits.Analysesbasedon socialcitizenshiprightsindicatemajor
retrenchment in some countries,with politicalpartiesand welfarestateinstitutions
playingsignificantroles. The returnof mass unemploymentand cuts in socialrights
appearas a reworkingof the Europeanpostwarsocialcontract.

INTRODUCTION

Once upon a time--not that long ago-there was consensus in WesternEurope

that the welfare states' full employmentand expanding social-citizenshiprights
inauguratedafter the end of WorldWar II had come to stay. This reshapingof
the welfare statehad emergedin the context of the sea change in powerrelations,
when for the firsttime in historyleft partieshadcome to be eitherdominantparties
in governmentsor the majoroppositionparties.In its 1945 election manifestothe
British LabourPartymade "jobs for all" and "social insuranceagainst the rainy
day" its primarypolitical objectives and outlined "the means needed to realise
them" (Craig 1975, pp. 124-25, 130). Labour'sunexpectedly great victory set
the tone and impressed a lesson that was widely accepted in Europe. Scholars,
politicians, and the public came to see the continued existence of such welfare
states as ensuredby a supportiveelectorate.In the 1950s this mood was summed
0360-0572/03/0811-0589$14.00 589

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590 KORPI

up by a leading British Labour politician: "Any Governmentwhich tampered

seriouslywith the full employmentWelfarestatewould meet with a sharpreversal
at the polls" (Crosland1956, p. 28). In the mid-1970s,however,this stabilitybegan
to evaporate.Before the end of the centuryWesternscholarshad shiftedtheirfocus
from the study of welfare-stateexpansionto analyses of its regress, welfare-state
retrenchment.In the 1990s the study of retrenchmentbecame a growth industry
with an outpouringof articlesand books.
In scholarlydebateson welfare-stateretrenchment,one key issue has concerned
the extent of retrenchment.On this question the dominantview has been that in
WesternEuropeno sweeping or radicalretrenchmenthas occurred,a view thathas
recently been questioned. Othercentral questions have concernedthe causes of
retrenchment.Here the debatehas been ratherintensive.In the theoreticaldiscus-
sions key issues haveconcernedthe relativesignificanceof threefactorswithinthis
context:economic transnationalization, postindustrialism,anddistributiveconflict
as expressed in partisanpolitics. Debates on economic transnationalizationhave
includednot only globalizationbut also the role of economic andpolitical integra-
tion within Europe.On the significanceof globalizationfor retrenchment,views
have differed. The majorproponentfor postindustrialchanges as causes for re-
trenchmenthas been PaulPierson.In a series of pioneeringandchallengingworks,
Pierson (1994; 1996; 2001a,b,c) stakedthe claims for what came to be described
as "thenew politics of the welfarestate."The new-politicsstrandof thoughtrejects
the hypothesisthatglobalizationis a main cause of retrenchment,arguinginstead
thathere postindustrialismexertedthe majorpressures.The new-politicsperspec-
tive also partlycounterposesitself in relationto the power-resourcesapproachto
welfare-statedevelopment.As is well known, the latterapproachviews welfare
states to a significantextent as outcomes of distributiveconflicts involving class-
relatedinterestgroups and political parties,conflicts where the relativepower of
actorsis significant(Esping-Andersen1985, 1990; Huber& Stephens2001; Korpi
1983, 1989; Myles 1984).
Although Pierson holds that the power-resourcesapproachis very fruitfulin
explainingwelfare-stateexpansion,he arguesthatin crucialrespectsretrenchment
is differentfrom expansion.Basic to the new-politics perspectiveis the hypothe-
sis that, in the retrenchmentphase, the majorforces drivingwelfare-statechange
no longer come from distributiveconflicts among socioeconomic interestgroups,
but ratheremanate from postindustrialchanges (Pierson 2001b). Growing ser-
vice sectors decreaseeconomic growthrates,whereasthe grayingof populations,
changing family patterns,increasing share of women in the public sector labor
force, and maturationof governmentwelfare commitmentsall tend to increase
social expenditures.Such postindustrialchanges generateintense and persistent
pressures on governmentbudgets (Pierson 2001a). The cold star of permanent
austeritythereforeguides governmentsof all political shades to attemptcuts in
social expenditures.
A centralchallengeby the new-politicsstrandof thoughtto the power-resources
approachis that,in the retrenchmentphase,class-relatedpoliticalpartiesthatonce

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 REGRESSIN WESTERNEUROPE
WELFARE-STATE 591

drovewelfare-stateexpansionhavenow largelyrecededinto thebackground.Thus,

althoughpolitics still matter,accordingto the new politics perspective"thereare
good reasons to believe that the centralityof left party and union confederation
strengthto welfare state outcomes has declined" (Pierson 1996, p. 151). New-
politics supportersview these forces as having been replacedto a large extent by
new clientgroupsof benefitrecipientsgeneratedby welfarestates,suchas pension-
ers, health-careconsumers,the disabled,andwelfare-stateemployees. Because of
the size andconcentrationof interestsin such client groups,they havebeen able to
largely resist governmentattemptsat cutbacks.The resilience of the welfare state
is furtherfortifiedby the new situationin which governmentsfind themselves.In
the expansionaryperiod politicians could claim credit for carryingout generally
popularreforms,but in the retrenchmentphase they have to overcomethe negativ-
ity bias when stronginterestgroupsarerequiredto forego rights andbenefitsseen
as entrenchedparts of the status quo. Pierson thus advancedthe hypothesis that
for these reasonswelfare-stateretrenchmentis likely to be a limitedphenomenon.
In thispaperI focus on WesternEuropesince the mid-1970s anddiscuss studies
of the extent and causes of welfare-stateregressor retrenchment.The latterterms
are used interchangeablyhere to refer to policy changes involving or implying
cuts in social rights in ways that are likely to increaseinequalityamong citizens.
Because of the large numberof studies dealing with welfare-statechange, this
review has to be highly selective, focusing on works that exemplify the various
strandsof thoughtconcerningthe drivingforces and extent of retrenchment.1
The reviewbegins with a considerationof the definitionof the dependentvari-
able in analysesof welfare-stateregressandwith methodologicalproblemsin such
analyses.I arguethat,althoughmost analyseshave focused on social transfersand
services, postwar welfare states of WesternEurope have typically included full
employmentas one cornerstone,making unemploymentincreases an important
indicator of welfare-stateregress. Furthermore,most comparativestudies have
been eitherbased on expendituredata and/orfocused on one or a few cases. Re-
cent workpermittingcomparisonbased on social-citizenshiprights,with datafor
a relativelylargenumberof countriesand long time periods,has greatlyimproved
the descriptionof wefare-stateregress as well as causal analysis. The next sec-
tion comparesEuropeancountriesand the United States with respect to the role
of full employmentin their respectivewelfare states and their differentpaths of
unemploymentdevelopmentsince the end of WorldWarII. The following section
describes the extent of retrenchmentin social-insuranceprogramsand discusses
the role of welfare-stateinstitutionsin this context. ThereafterI discuss the po-
tential role of partisanpolitics duringthe period of retrenchmentfor differences

1Aspointedoutby severalauthors,welfarestateschangein a numberof ways,onlysome

of whichcanbe describedas regressor retrenchment(Ferrera& Rhodes2000, Pierson
2001a). The numerousstudies that do not concentrateon retrenchmentare not included
here. In EasternEurope developmentsin the countriesof the formerSoviet block are so
differentthatthey cannotbe treatedhere.

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592 KORPI

among countries as well as the role of retrenchmentfor gender inequality.The

penultimatesection reviews the effects of globalizationand of ongoing processes
of political and economic integrationin Europe on welfare-stateregress, differ-
entiatingbetween variousaspects of welfare states.The last section discusses the
findingsin this review.In dealing with theoreticalargumentsand causal interpre-
tations, I focus attentionon a comparisonbetween the new-politics perspective
and the power-resourcesapproach.

DEFINITIONAND MEASUREMENT
OF WELFARESTATES

In the studyof retrenchmentthe dependentvariable,the welfarestate,has typically

been definedin termsof social transfersand/orsocial services.Althoughthese two
areas, of course, are central, in analyses of retrenchmentit is necessary to have
a theoreticallybased definitionof the dependentvariable.In the power-resources
approachscholarsview postwarchangesin welfare statesto a significantextent as
reflectingpower contests among majorinterestgroupsrelatedto the relativerole
of marketsand democraticpolitics in distributiveprocesses. These conflicts also
define and change institutionsthat set framesfor continueddistributiveconflicts.
Such an approachindicates that, although transfersand services are important,
here at least one more areamust be considered,namely thatof unemployment.
In the power-resourcesperspectiveunemploymentappearsas a centralvariable
because for categories of citizens with labor power as their main basic power
resource,the efficacy of this resourcein distributiveconflictandbargainingis to a
majorextentdeterminedby the demandfor laborandby thelevel of unemployment.
In this perspective the maintenanceof low levels of unemploymentempowers
citizens and is an essential preventivepartof the welfare state (for example, see
Korpi1983, p. 188). However,the rightto employmentis very difficultto establish
as a claim right.Yet,in almostall countriesof WesternEuropein the years afterthe
end of WorldWarII, full employmentbecamewhatcanbe called a social protoright
in the sense thatit was widely expectedby citizens andthatirrespectiveof partisan
compositionmost Europeangovernmentsactedso as to maintainfull employment.
As Blanchflower& Oswald(1994) have shown,the level of unemploymenthas
a clear relevanceto wage levels. In local labor marketsand industrieswith high
unemployment,wages tendto be lowerthanwhereunemploymentis low. This em-
piricalfact indicatesthatthe level of unemploymentis likely to be both a mainbone
of contentionbetween employersand employees and a majorfactor determining
outcomes of the positive-sum distributiveconflict between them concerningthe
distributionof firmrevenues.The state of the labormarketand changes in levels
of unemploymentmust thereforebe seen as essential welfare-stateindicatorsand
can not be overlookedin analyses of welfare-stateretrenchment.
As in earlieranalyses of welfare-stateexpansion,in the study of retrenchment
the typical dependentvariablehas been welfare-stateeffort, defined as the size
of governmentsocial expendituresin relationto the gross domesticproduct.With
basic dataavailablein publicationsby the InternationalLabourOrganization(ILO)

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 WELFARE-STATE
REGRESSIN WESTERNEUROPE 593

and the Organisationfor Economic Cooperationand Development(OECD), this

indicatorhas been widely used. Unfortunately,however,the well-knownproblems
associatedwith the welfare-effortindicatorbecome aggravatedin the analysis of
retrenchment.Thus,for example,internationaldevelopmentsandgovernmentpoli-
cies can raise the level of unemployment,therebyincreasingpublic expenditures
for the maintenanceof the unemployedwhile also tending to slow down growth
in the gross domestic product.Thereforea reliance on the conventionalwelfare
state-effort indicatormay make an unemploymentcrises appearas an actual in-
crease in welfare-stateeffort. As arguedby Swank (2001, p. 215), with proper
control variablessome of these problemscan be counteracted,yet in this context
results based on expenditurechanges are likely to remainproblematic.
As a complementto studieson welfare-statedevelopmentbasedon expenditure
dataand case studies, within the Social CitizenshipIndicatorProgram(SCIP), al-
ternativemeasuresof welfare-statedevelopmentarein the processof beingcreated;
these measuresfocus on describingand quantifyingthe natureof legislated social
rightsin majorsocial insuranceprograms.2Preliminarydatafrom this sourcehave
been used to analyzeretrenchmentin social insuranceprogramsin the 1975-1995
period(Korpi& Palme 2000, 2001, 2003). Since social rightsreflectwelfare-state
developmentfrom a differentangle than the one expressed in expendituredata,
these analyses provide a relevantpoint of comparisonwith results from earlier
studies.

THE REGRESSOF FULLEMPLOYMENT

IN EUROPE

As noted above for welfare-stateregress,the hypothesisof only limited retrench-

ment has won rapid and widespreadacceptance among Western scholars. This
acceptance appearsto reflect not so much the weight and depth of the empiri-
cal data presentedas the symbolic statureof the two cases originally studiedby

2Thisongoingworkis carriedoutattheSwedishInstituteforSocialResearch,Stockholm
University,andis directedby W.Korpi& J.Palme.Thedatacollectioncovers18countries
at 14timepointsduringthe1930-1995period.Thefivesocial-insurance programs included
areold-agepensions,sicknesscashbenefits,unemployment insurance,work-accidentin-
surance,andfamilybenefits.Besidesnetbenefitlevels,for eachprograminformation on
a numberof othervariablesarecollected(fordetailsalso see Korpi& Palme2000,2001,
2002).Thescopeof theworkinvolvedis indictedby a comparison withanOECDreport
on one variable(benefitrates)at one timepoint(1999)in one program(unemployment
insurance),wherethe one-pagetablesummarizing the resultsrequiredno less than332
pagesof textexplainingsourcesandwaysof calculationto showhowtheywerederived
(OECD1999).Tomakedatacollectionof thistypepossible,theInternational Sociological
Associationhas establishedthe followingethicalguidelines:"Databasesshouldnot be
regardedas beingin the publicdomainuntilthe researchers who haveassembledthem
havespecifiedthe sourcesof theirdataandthemethodsby whichtheywereconstructed.
... Interimdatasetsshouldbe availableforinspectionof theiraccuracyby otherscholars"
(ISABulletinno. 72, 1997).

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594 KORPI

Pierson(1994). Choosingthe UnitedStatesunderRonaldReaganandBritainunder

MargaretThatcheras his crucial test cases, Pierson asked, if retrenchmentcould
not be found undersuch militantantiwelfare-stategovernments,then where else
could it be found?In the Europeancontext,Pierson'sconclusion that the "British
welfare state,if battered,remainsintact"was especially persuasive(Pierson 1994,
p. 161). In retrospectit is, however,clear that owing to the pioneeringnatureof
these studies there are many problems associated with the empiricalbases upon
which these claims have been based. It can be arguedthat severalof these claims
are prematureand reflect problemsin the definitionof welfare states, a reliance
on case studies of few countries, and the use of social expendituredata as the
primeoutcomevariable.HereI focus on WesternEuropesince the mid-1970s and
discuss studies of the extent and causes of welfare-stateregress or retrenchment.
(Korpi& Palme 2000, 2001, 2003).
One centralproblemwith most analysesof welfare-stateregressis thattheyhave
excludedchangesin levels of unemploymentandhaveonly indirectlydealtwith the
returnof mass unemploymentin Europesince the 1970s. In theirimpressivestudy
Huber& Stephens(2001) broughthigh unemploymentinto the analyses in terms
of contexts in which retrenchmentis likely to occur;however,they did so without
analyzingthe demise of full employmentas partof welfare-stateregress. Castles
(2001) also considersunemploymentas a contextualvariablein the retrenchment
process.
The role of full employmentin the welfare statediffersgreatlybetween Europe
andNorthAmerica.In almost all democraciesof WesternEuropethe firstdecades
after the end of WorldWarII witnessed a remarkablechange in societal power
relationswhen, for the firsttime in the history of capitalism,left partiesemerged
as either governmentpartiesor majoroppositionpartiesand union densities dou-
bled in relationto levels obtainedbetween the world wars. This dramaticchange
forms the backgroundfor the expansionaryperiodof Europeanwelfare states.The
mobilizationof labor force duringthe war had provedthat in the real world full
employment could be achieved. Keynesian ideas showed that also theoretically
full employmentwas possible and that deep recessions such as those appearing
between the two world wars could be avoided.
In WesternEuropethe emergenceof full employmentas well as the expansion
of social transfersand social services thus emerged at approximatelythe same
time. Crosland's(1956) statementaboutgovernmentandfull employment(quoted
above)indicatesthatcontemporariessaw this tripletas constitutinga unity,the full-
employmentwelfare state, where expandingsocial insuranceand services were
combinedwith unemploymentratesbelow the 3%maximumlevel set by theBritish
social reformerWilliamBeveridge(1944). In Europethe conceptof the Keynesian
welfare state became widely used (e.g., Offe 1984). In Europeancountrieswith
an uninterruptedpolitical democracyduringthe postwarperiod this type of full-
employmentwelfare state can be seen as an outcome of distributiveconflicts and
macropoliticalbargainingthat resulted from the changing relations of power in
Europeansocieties as noted above. It was a manifestationof what can be called

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 WELFARE-STATE
REGRESS EUROPE
IN WESTERN 595

an implicit social contractbetween the main interest groups in these countries

(Korpi2002). However,some differencescan be found among countries.Ireland
and Italy, with the weakest traditionsof left governmentincumbency,retained
relativelyhigh levels of unemploymentduringthe 1950s and 1960s. Furthermore,
when unemploymentlevels rose afterthe firstoil shock in 1973, this rise was much
more dramaticin the countriesof the EuropeanEconomicCommunity(EEC)than
in the countries of the EuropeanFree Trade Area (EFTA), where the rise was
delayed for approximately15 years.
During the period after WorldWarII WesternEurope and the United States
had very differenthistorieswhen it came to levels of unemployment.In the United
Statesthe postwarsocial contractdid not includefull employmentin the European
sense. From 1955 to 1973 U.S. unemploymentlevels averaged4.9% (Figure 1).
In the same period six core countriesof the EuropeanEconomic Community-
Belgium,Denmark,France,Germany,Netherlands,andthe UnitedKingdom-had
less than half of the U.S. unemploymentlevel, 2.1%. But after the oil shocks in
1973 and 1979, the averageunemploymentlevel in these countriesquadrupledand
was 8.2%during 1982-2000, while changes in the United States were modest. In
fact, afterWorldWarII and until the end of the century,U.S. unemploymentrates
have shown essentially trendless fluctuation.In stark contrast WesternEurope
experiencedfirstthe arrivalof full employmentand thereafterthe returnof mass
unemployment.

11

10

8
7
(%)
Europe
rate 6

4
Unemployment United States

3
2
1
0
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Figure 1 Unemploymentrates(3-yearmovingaverages)1955-2000 in the United

States and in six Europeancountries-Belgium, Denmark,France,Germany,the
Netherlands,andthe UnitedKingdom.

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596 KORPI

Clearlya numberof factorswere of relevanceto the returnof mass unemploy-

ment to Europe.3However,conflicts of interestbetween majorinterestgroupsare
likely to have been of significancethere.Long-lastingfull employmentin Europe
came to have consequencesunwantedby importantinterestgroups.Thusbusiness
interest saw with increasing alarm the rising levels of labor-forceinvolvement
in industrialconflict as well as the falling shareof profitsand increasingshareof
wages in the domesticproduct.Yetthe fearof voterreactionspressedgovernments
of all political shades to give top priorityto full employmentin the tradeoffbe-
tween inflationand employment(OECD 1970). As arguedby Rehn (1987), many
Europeangovernmentsare likely to have used the window of opportunitycreated
by the oil shocks of 1973 and 1979 to allow levels of unemploymentto escalate.In
the 1990s U.S. unemploymentratesdecreasedmore thanthe Europeanaverage.
Withinthe Europeanperspective,full employmentwas thus a constitutivepart
of the welfare state. When judged in relation to the reality prior to 1973, the
returnof massunemploymentmustbe seen as a majorretrenchment,the eradication
of one of the cornerstonesof WesternEuropeanwelfare states. However, this
radical change has occurredoutside the focus of the new-politics approachand
has thereforenot been conceived as a case of retrenchment.

SOCIAL INSURANCE, EXPENDITURES,

AND INSTITUTIONS

Pierson's pioneeringwork on welfare-stateretrenchmenthas been followed by a

numberof interestingstudies.4Some are comparativeand based largely on ex-
pendituredata (see Castles 2001, Clayton & Pontusson1998, Hicks 1999, Huber
& Stephens 2001, Swank 2001). However, most of them are examinations of
a single or a few countries,often in qualitativeterms (see Bonoli & Palier 1998;
Green-Pedersen2001, 2002; Kautto2000; Leibfried2001; Levy 1999;Olsen2002;
Palier2000; Palme2002; Palme& Wennemo1998). These studieslargelyagreeon
the natureof the pressurestowardretrenchmentfaced by modernwelfare states:
population aging, changing family patterns,new gender roles, decreasing eco-
nomic growth rates, technological change, internationalizationof the economy,
and changing relations between nation states as a result of the end of the Cold
Warand political-economicintegrationin Europe.These studieshave also largely
agreedthat to a remarkableextent Europeanwelfare states have been resistantto

3Foranalysesof thearrival,continuation,
anddemiseof fullemploymentin Westerncoun-
tries,see Korpi(2002).
4Collectiveworksof significance
in thiscontextarevolumesbyClasen(2001),Bonoliet al.
(2000),Esping-Andersen (1996),Ferrera& Rhodes(2000),Kauttoet al. (1999, 2001),
Kuhnle(2000),Pierson(2001c),andScharpf& Schmidt(2000a,b).Reviewsof selected
literaturearefoundin Green-Pedersen & Haverland (2002),vanKersbergen(2000),and
Lindbom(2002).

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 WELFARE-STATE IN WESTERN
REGRESS EUROPE 597

change. Thus,for example,aftera surveyvan Kersbergen(2000, p. 25) concluded

the following: "Thegeneralthesis thatmay be distilled from the literatureis that
while the context of welfare statepolicies has changed,this has not lead to a dis-
mantlingof existing welfarestateregimesor single programmes."Green-Pedersen
& Haverland(2002, p. 44) note thatin the post-Piersonliterature"theexpectation
of no sweeping retrenchmenthas largely been confirmed."Additionally,as the
title of his edited book indicates,Kuhnle(2000) and his colleagues observedThe
Survivalof the EuropeanWelfareState.Furthermore,in the newly redemocratized
countriesof WesternEurope,such as Spain,welfarestateshave actuallyexpanded
(Moreno 2000). To account for this resilience several of these authorspoint to
the widespreadpopularsupportfor the welfare state and to the path dependency
createdby welfare states.
As noted above, although clearly valuable and relevant,many of the studies
made on retrenchmentareproblematic.Apartfrom overlookingthe demise of Eu-
ropeanfull employment,analysesbased on expendituredataface otherdifficulties
in disentanglingconsequences of factors such as increasinglevels of unemploy-
ment and changes in benefit levels, whereas more qualitativelyoriented studies
offer ratherweak benchmarksfor studyingchange over time and differencesbe-
tween countries.The SCIP database(discussed above) providespreliminarydata
quantifyingsocial rightsin majorsocial-insuranceprogramsand therebyan alter-
nativeempiricalbasis for the analysisof retrenchment(Korpi& Palme2000, 2001,
2003). Here changes in the net replacementrates of three programsfor benefits
received as a result of short-terminterruptionsof work income-that is, benefits
during sickness, work accidents, and unemployment-are of particularinterest.
These programsare of majorimportanceto governmentbudget deficits. Further-
more in these programsgovernmentdecisions on cuts will usually have relatively
quickeffects on net replacementrates,a circumstancethatincreasesthe possibility
of relatingcutsto politicaldecisionmaking.Thus,these short-termprogramsdiffer
from old-age pensions, wherepolitical decisions may have consequencesdecades
later.Net replacementrates in these programsgive unidimensionalvariablesfor
studying change over longer time periods and for a relatively large numberof
countries.
Analyses based on the above social-rightsdata indicate that in the long per-
spective startingback in 1930 the averagenet benefits for 13 Europeancountries
in each of these three programshave had a monotonic increase with an acceler-
ation thatbegan in 1950 and continueduntil approximately1975, followed by a
decrease until 1995 (Korpi & Palme 2003). This downwarddeviation from the
long-increasingtrendis an indicationof retrenchment.Yet averagedecreasescan-
not be described as an overall dismantlingof these social-insuranceprograms.
Unlike the removal of full employmentfrom almost all Europeanwelfare states
after 1973, in these three social-insuranceprogramswe find great differences
among countries. Here Britain-established as the crucial test case in the ear-
lier literatureon the extent and causes of retrenchment-is a relevantexample.
By 1995, following the coming of the Conservativegovernmentin 1979, net

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598 KORPI

replacementratesin these threeprogramswere cut backbelow the minimumlev-

els establishedin the 1946 reform.Replacementratesin sickness insurancewere
actuallyreducedto approximatelythe same level as thatin 1930, while unemploy-
ment and work-accidentinsurancebenefitsplungedto approximatelyhalf of their
1930 levels.
Path dependencyhas often been used as an explanationfor welfare-statere-
silience. Myles & Pierson (2001) have drawn attentionto a major mechanism
explaining such stabilityin pay-as-you-gopensions systems:the double payment
problem. In countries with well-developed pay-as-you-go pension systems the
working generationis paying the pensions for retirees and cannot easily accept
also contributingto theirown futurepensions in a fundedsystem. Maturepay-as-
you-go pension systems are thereforedifficultto change into fundedprograms.It
is importantthat we can explain differencesin the extent of path dependencyin
termsof specific mechanismsthatgeneratemore or less resistanceto cuts. Often,
however,the concept of pathdependencyis used to label absenceof changerather
thanto explain resistanceto change.
As noted above, in the new-politicsperspectiveit is widely assumedthatresis-
tance to welfare-statecuts comes primarilyfrom categoriesof benefit recipients,
such as retirees, the unemployed, the handicapped,and health-careconsumers.
Although such categoriesarerelevantandretireesin particularconstitutea signif-
icant partof the electoratein most countries,otherbenefitrecipients,for example
the unemployed,have traditionallybeen very difficult to mobilize. It can be ar-
gued that of greaterrelevancehere is the much largerconstituencyof risk-averse
citizens, who benefit from insurancein terms of the reductionof risks they are
likely to face duringthe life course.However,in Westernsocieties risk-averseciti-
zens are internallydifferentiatedby a numberof potentialandpartlycross-cutting
lines of cleavage,such as occupation,status,income, education,ethnicity,religion,
and region. These cleavages also differentiatecitizens in termsof lifetime risk as
well as in terms of the resourcesthey control to handle these risks. Given these
circumstances,reflecting theory formationwithin the "new institutionalism,"it
can be arguedthat major welfare-stateinstitutionsare likely to be of relevance
for the formationof values, attitudes,and interestsamong citizens in ways that
are of relevance for patternsof collective action. This is because welfare-state
institutionstend to create templatesthat emphasize some of the lines of cleavage
discussed above while downplayingothers. The institutionalcontexts generated
by welfare statesarethereforelikely to affectcitizens' coalitionformationin terms
of the extent of supportand resistancethat governmentefforts to cut back social
rights are likely to face (Korpi& Palme 1998, Korpi2001). The institutionalor-
ganizationof risk-aversecitizens, ratherthan the numberof benefit recipients,is
likely to be of main relevancefor the degree of path dependencyin welfare-state
programs.
To accountfor differencesamong countriesin terms of welfare-statedevelop-
ment, it is fruitful to relate changes in social rights to a welfare-statetypology
based on the natureof the institutionalstructuresof the main social-insurance

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 WELFARE-STATE
REGRESSIN WESTERNEUROPE 599

programsin a country (Korpi & Palme 1998, Korpi 2001).5 This typology dif-
ferentiatessocial-insuranceinstitutionsby using three criteria:basis for claiming
benefits,principlesfor settingbenefitlevels, andformsof governanceof insurance
programs.Onthe bases of these criteria,it is possible to identifyfive differenttypes
of institutionalstructures,which historicallyhaveexisted in Westernwelfarestate.
These institutionalstructuresconstitutethe targeted,voluntarystate-subsidized,
basic security,statecorporatist,andencompassingmodels. In present-dayEurope
the latterthreemodels are the most importantones.
The basic-securitymodel is universalisticand gives benefitsto all at a flat rate,
which typically is ratherlow. Because of the low benefit rates inherentin this
model, it cannotprotectaccustomedstandardsof living of better-offcitizens, who
thereforeare likely to graduallydevelop private solutions such as occupational
insuranceand savings. In the long run, in this model social-insuranceprograms
will be a concern primarilyfor manual workers, whereas privateprogramsas-
sume main relevance for the middle class. This type of institutionprovides a
context where governmentattemptsto cut public programsare unlikely to meet
widespreador unified resistance and thus are likely to suffer retrenchment.In
contrast, the state-corporatistmodel as well as the encompassing model offer
earnings-relatedbenefits. Within these institutionalstructures,public programs
tend to safeguardaccustomedstandardsof living amongthe middle class, thereby
decreasingthe need for privatesolutions and "crowdingout" differenttypes of
privateinsurance.However,the state-corporatistandthe encompassingmodels af-
fect the middleclass within very differentcontexts.In the state-corporatistmodel
thereareseveralseparateoccupation-relatedinsuranceprograms,differentiatedin
termsof conditions,financing,andbenefits.Each programis governedby elected
representativesof employers and employees, typically from the unions. Within
state-corporatistinstitutions,governmentattemptsat retrenchmentare likely to
meet resistance from preorganizedbodies of risk-aversecitizens attemptingto
safeguardtheirspecific interests.In contrast,in the encompassingmodel the mid-
dle class is included in the same programsas all other citizens. In the expan-
sion phase this broadconstituencywas mobilized by political partiesand formed
a major force in favor of welfare-stateexpansion. When faced with cutbacks,
however,such a heterogeneousassembly of citizens is difficultto mobilize from
the inside. In this institutionalcontext the degree of resistanceis likely to reflect

5Incontrastto Esping-Andersen's (1990) influentialtypologyof welfare-state

regimes,
whichis basedon a broadset of indicatorsandthereforefruitfulfor generaldescriptive
purposes,thistypologyis focusedon welfare-state institutions,
whichcanbe seenas inter-
veningvariables,relatingcausesto outcomes.Thisinstitution-based typologyprovidesa
muchmoreprecisebasisfor differentiation of welfarestates,formeasuringchangesover
time,as well as for causalanalysis.Thesocial-insurance programs usedforthetypology
areold-agepensionsandsicknesscashbenefits,programs thatareof majorrelevancefor
all socioeconomic categories.In almostall thesecountriessicknesscashbenefitprograms
havethesametypeof institutional structureas old-agepensions.

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600 KORPI

the extent to which political parties are willing to mobilize voters against
cutbacks.
The widely acceptednew-politicshypothesisof only limited retrenchmenthas
been called into question by analyses of cutbacks in terms of indicators of so-
cial rights, focusing on sickness, work accident, and unemploymentinsurance
programs(discussed above) and on changes in net replacementlevels within 13
Europeancountries(Korpi& Palme 2001, 2003). One indicatorwas based on cuts
measuredas declines in benefitlevels until 1995 fromthe peak levels reacheddur-
ing 1975-1990. Importantdifferenceswere found among countries,some partof
whichcanbe understoodin termsof the structureof theirdominantsocial-insurance
institutions.6The largest cuts had clearly taken place in countriesdominatedby
basic security institutions.Here Britainwas clearly in the lead with averagenet
replacementratesthatwere reducedby almosthalf. Irelandfollowed with cutbacks
amountingto one thirdof peak rates. Denmarkhad cutbacksof the orderof one
fifth of peak rates, while lower rates were found in the Netherlands.Among the
basic securitycountriesSwitzerlandhad no majorcutbacks.7Among the statecor-
poratistcountriescuts were, on average,lowest. Thus whereasin Austria,France,
Germany,and Italy unemploymentinsuranceprogramshad seen significantcuts,
sickness and work-accidentprogramshad largelybeen spared.An exception here
was Belgium, where net benefits decreased markedlyin sickness insurance.In
the encompassingcategory,cuts were on the averagelower thanin countrieswith
basic-securityprograms,but both Sweden and Finlandhad made some important
cuts, primarilyduringthe early 1990s when theirunemploymentlevels exploded.
Norway with its oil economy largely escaped cuts.
With reliable and comparableempiricaldata reflectingthe characterof social
rightsin a largenumberof countriesover a longer period,we get a perspectiveon
the extentof retrenchmentin social-insuranceprogramsthatis quitedifferentfrom
the ones basedon expendituredataandqualitativecase studies.In at least a handful
of Europeancountries,majorretrenchmentin social-insurancerightsnow appears.
There is no generalpath dependency;instead the differenttypes of welfare-state
institutionsin combinationwith factors such as constitutionalveto points appear
to play significantroles in termsof pathdependencyand resistanceto cuts.

CLASSAND GENDER
As notedabovea centralhypothesisin the new-politicsperspectiveis that,although
partisanpolitics andclass-relatedpartieswere of majorimportanceduringwelfare-
stateexpansion,in the retrenchmentphasethey areof little significance.Although

6Becauseof significant correlations betweenpotentialcausalandcontextual variables,such

as the numberof constitutional veto points,the type of dominantpoliticalparties,and
thestructure of socialinsurance institutions,separating thedifferentcontributions
of these
factorsto retrenchment is difficult.
7Therelativestabilityin Switzerland is likelyto partlyreflectthelargenumberof constitu-
tionalvetopointsin its policy-making system.

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 REGRESSIN WESTERNEUROPE
WELFARE-STATE 601

debated,this hypothesis has been accepted by many. Such a view appearsto be

supported,forexample,by observationsthatin Germanythe ChristianDemocratic-
Liberal coalition governmentwas very cautious in attemptingto trim its state-
corporatistwelfare state. This view has received additionalsupportin empirical
studies. On the basis of expendituredata, Huber & Stephens (2001) found that
over time the role of partisanpolitics decreasedconsiderably.Similarfindingsare
also reportedby Castles (2001). Ross (2000) arguesthataccordingto the "Nixon-
goes-to-China"logic, left parties traditionallyassociated with the welfare-state
expansion are likely to have more "degreesof freedom"to make cuts than have
right parties.
On the issue of the role of political parties, we find dissenting voices. Hicks
(1999, p. 220-21) arguesthatthe left-rightdimensionsremainedsignificantduring
the retrenchmentphase. In a case studyof the NetherlandsGreen-Pedersen(2001,
2002) analysed the role of the confessional political tendency, which played a
majorrole in all Dutch governmentsduringthe twentiethcenturyuntil 1995. He
arguedthat,because of the pivotal role of the ChristianDemocraticparty,in the
early 1980s this party was able to make the reluctantbut relatively weak social
democraticpartyaccept cutbacksin welfarebenefits.Levy (1999) suggestedthat,
when facedwith the necessity to cut, social democraticgovernmentsin continental
Europeancountriesattemptedto turn"vice into virtue"by predominantlycutting,
for example, overly lenient pension programswhile improving benefits for the
most needy. Kitschelt (2001) as well as Ross (2000) outlined factors in political
partysystems that are likely to favorpossibilities for retrenchment.
In contrastanalyses on the role of partisanpolitics based on SCIPdataindicate
clearlysignificanteffects of partisanpolitics on retrenchmentin socialrights(Korpi
& Palme2001, 2003). Events of retrenchmentwere delineatedin termsof cuts of
at least 10%in net benefit levels in sickness, unemployment,and work-accident
insuranceduringthe 1975-1995 period.Takinginto accountthe relativenumberof
cabinetportfoliosby differentpartiesandthe durationof these cabinets,therelative
risk for majorcuts was approximatelyfourtimes higherfor the secularcenter-right
parties than for left parties.Although analyses of welfare-stateexpansionbased
on expendituredata has often viewed confessional parties as almost equivalent
to social democraticones, when it comes to retrenchmentin social rights they
were found to occupy a position between the othertwo partyconstellations.This
patternof partisanpolitical effects was also supportedby event history analysis
andremainedwhen a numberof institutionalandeconomic controlvariableswere
considered.
Attitudinalstudiesin severalWesternEuropeancountriesindicatethatthe wel-
fare state has retainedwidespreadpublic support,a supportwhich continues to
be structuredby socioeconomic class and the left-right continuumin expected
patterns(Taylor-Gooby1999; Svallfors 1999, 2003; Goul Andersen 1999). Yet
changes have also been noted. In Sweden after the conversionby conservative-
centrist parties and the employers' confederationto a very critical view of the
welfare state, in the early 1990s top-level employees in the privatesectorbecame
more negative, whereas lower-middle-classemployees and workersin privateas

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602 KORPI

well as in public sectors largely retained their positive views (Svallfors 1996).
When the conservative-centristgovernment(1991-1994) introducedmajorcuts in
social-insuranceprograms,it was unseatedby a surgeof social democraticsupport
in the 1994 election. In its effortsto decreaselargebudgetdeficits, the new Social
Democraticgovernmentcontinuedto cut replacementrates,cuts contributingto a
precipitousfall in the opinionpolls. When it comes to welfare-stateretrenchment,
the Nixon-goes-to-Chinalogic may have a relativelylimitedsphereof application.
Despite the voluminouswritingon welfare-stateretrenchmentin recent years,
one cannotfail to notice the dog thatdid not bark:Little attentionhas been paid to
consequencesof regressfor genderinequality.This may indicatethatretrenchment
has not had very seriouseffects on the position andrelativelife chancesof women.
O'Connoret al. (1999, p. 113) note thatin the welfare statesof Australia,Britain,
Canada,and the United States women have been disadvantagedby changes such
as strengthenedwork incentives and increasedtargetingof programs,yet "while
retrenchmenthas occurred,restructuringis perhapsa betteroverall descriptionof
the social policy changes duringthe last two decades."Sainsbury(1996, ch. 9)
arguedthatin countriessuch as Britainand the Netherlandsan increasingreliance
on means-testedbenefits in combinationwith restrictedaccess to such benefits
has increasedgenderinequalitybecause women rely on such benefits much more
than men and because means-testedbenefits for wives tend to deter their labor-
force participation.Montanari(2000, ch. 3) observesthatin Westerncountriesthe
long-termtrendtowardan increasingreliance on universalcash benefits in child
supportwas brokenin the 1980s when tax concessions increasedin importance.
Such a developmenttends to disadvantagesingle mothers.
In this context, it must also be pointed out that in the Nordic countries with
their large public sectors "manned"largely by women majorcuts in the number
of employees withouta similardecreasein the clients of the public sector have to
a significantextentincreasedthe burdensof those remainingthere.In Continental
Europewith relativelylow female labor-forceparticipationrates,high unemploy-
ment is likely to have slowed the rate of increase in female participationwhile
increasingthe role of often-insecurepart-timejobs.

AND EUROPEANIZATION
GLOBALIZATION

In the 1990s globalizationbecame a term on everybody'slips and was used to

suggest a varietyof internationalchallengesfacing nationstatesand theirwelfare-
state arrangementsin particular.8Initiallythreatsfrom globalizationagainstwel-
fare states were often seen as severe, but gradually views have been shifting.
For example, althoughMishra (1999) saw globalizationas a very serious threat
to the foundationsof welfare states, such views have been questionedby others

8Asis well known,thetermglobalization

hasmanymeanings.I use it hereto referto the
of cross-border
liberalization andof international
capitalmovements trade.

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 REGRESSIN WESTERNEUROPE
WELFARE-STATE 603

(e.g., Boyer & Drache 1996, Garrett1998). Many scholars have come to see
the effects of globalization as conditional on national institutions and political
interventions(Esping-Andersen1996, Palier& Sykes 2001, Swank 2001). In the
processesof globalizationinternationalorganizationshaveplayed significantroles
(Deacon et al. 1997). As noted above, Pierson largely dismisses globalizationas
a source for fundamentalwelfare-statechange. In discussions of the effects of
efforts towardeconomic and political integrationwithin the E.U. we also find
considerabledebates(Leibfried& Pierson 1995; Rhodes 1996, 2002).
In analyzingthe role of internationalpolitical and economic changes for na-
tional policy making, distinguishingbetween differentpolicy sectors in welfare
states is fruitful. One importantdistinction is found between policies to main-
tain full employmentand social insuranceand social services. National policies
to maintainfull employment are likely to be much more sensitive to, and de-
pendent on, internationaldevelopmentsthan social-insuranceand -service pro-
grams are. Of relevancehere is that,with the exception of the largesteconomies,
most Westerncountriesare markedlyexport dependent.As Fligstein & Merand
(2002) noted,tradegrowthhas been especially pronouncedwithin the E.U. When
countriesin economic crises decrease their imports,export possibilities in other
countries decline and their unemploymentproblems mount, thereby likely cre-
ating a situation that pressures governmentsto make cuts in social-insurance
and -service programs.In Europe full employment after the end of WorldWar
II was conditionedby Bretton-Woodsinstitutions,giving national governments
influence over cross-bordercapital flows while liberalizing cross-bordertrade.
With the dismantlingof cross-bordercapital controls and increasing economic
integrationwithin Europe, if unemploymentis allowed to rise in some coun-
tries, maintainingfull employmentbecomes very difficult,especially for smaller
countries.
A large-scaleexperimenton the role of economic interdependenceandpolitical
factors contributingto the rise of unemploymenttook place in Europe after the
two oil shocks in 1973 and 1979. As discussed above, while levels of unemploy-
ment increaseddramaticallyin the EEC countries,the EFTA countries(Austria,
Finland,Norway,Sweden, andSwitzerland),wheresocial democratshadlong par-
ticipatedin governments,attemptedvia variousmeans to avoid the returnof mass
unemployment.For almost two decades, the EFTAcountrieswere relativelysuc-
cessful in these attempts,butin the early 1990s, especially in FinlandandSweden,
unemploymentlevels convergedto the high Europeanaverage(Korpi2002).
Many economists have arguedthat globalizationhas interactedwith techno-
logical developmentsto increase levels of unemploymentin the economically
advancedcountries. The assumptionhere is that technological developmentsin
these economies have escalatededucationaljob requirementsto levels where the
less educatedno longer are qualified.At the same time less-qualifiedproduction
is moved to low-wage countries.In advancedeconomies job demands are thus
assumed to have outrun the educationalqualificationsof significant sectors of
the labor force. Such interpretationsare often supportedby the observationthat

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604 KORPI

levels of unemploymenttendto be especiallyhigh amongworkerswith low educa-

tional qualifications,a correlationinterpretedin causal terms.However,a similar
correlationexisted alreadyduringthe periodof relativelylow unemployment.Fur-
thermore,in all Westerncountrieslevels of educationhavebeen rapidlyincreasing.
Severalresearchershave found thatmany employees are educationallyoverquali-
fied for theirpresentjobs (Aberg2003, Borghans& de Griep2000, Freeman1976).
The observed correlationbetween educationand the risk of unemploymentmay
to a significantextentreflectstatisticaldiscriminationby employers,who use edu-
cationallevels as a shorthandwhen sortingthroughthe increasingnumbersof job
applicants.An alternativeexplanationfor the increasinglevels of unemployment
is that overall demandfor laborhas been depressedand remainslow.
In the 1990s economic andpolitical integrationin Europeaccelerated,with the
creationof the E.U. andthe EuropeanMonetaryUnion as importantlandmarks.In
the EuropeanMonetaryUnion we find institutionalchanges that tend to depress
overall demandandtherebycounteractdecreasesin unemployment.In contrastto
the FederalReserveBank of the United States, which is instructedto considerthe
effects of its policies on employmentand growthas well as on inflation,the new
EuropeanCentralBank has a very low inflationtargetas its only goal. Whereasin
recentyears the FederalReserve Bankhas tendedto frequentlydecreaseits prime
ratesin responseto increasingunemployment,Europeancentralbanks have been
steadfastin maintaininghigh interestlevels duringlong periods,withoutregardto
unemploymentlevels (Ball 1999, Carlin& Soskice 1997). The EuropeanMone-
taryUnion and its associatedstabilitypact place strictrequirementson economic
policies of membercountriesin terms of low levels of inflationand government
debt.It can be arguedthatin severalcountriesgovernmentattemptsto achieve and
to maintainthese criteriahave contributedto very high levels of unemployment
(Guill6n& Alvarz 2001, Kosonen2001).
Yet most of the effects of economic and political integrationwithin the E.U.
on social insuranceand social services appearto have been indirect,with high un-
employmentserving as the main catalyst,whereas directeffects on social policy
making have been limited. Most of the interventionsof the EuropeanCommis-
sion in the social-policy arenahave been issued not as bindingdirectivesbut only
as recommendationsthatmembercountriesarefree to follow or disregard(Deacon
2000; Hantrais 2000; Montanari 1995, 2001). Based on the SCIP data set,
Montanari(1995, 2001) found little evidence for convergenceof legislation on
social rights within member countriesin five main branchesof social insurance
in the period 1970-1990. The EuropeanCourtof Justicehas, however,had direct
effects on social policy at the Europeanlevel by barringsome aspects of negative
treatmentof women in the labor market(Hobson 2000). In this area, however,
future developmentremainsopen and to a large extent depends on outcomes of
ongoing internalconflicts focused on the issue of if this assembly of countriesis
to move towarda federal structureimplying some form of a Europeangovern-
ment or if it is to remaina union for cooperationbetween relativelyindependent
nation states.

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 WELFARE-STATE
REGRESSIN WESTERNEUROPE 605

DISCUSSION

The dramaticchanges taking place in the economies of the Westerncountries

duringthe past threedecades have generateda numberof importantand informa-
tive books and articles on the consequences of these changes for welfare states.
A review of the rapidlyexpandingresearchon welfare-stateretrenchmentpoints
to the importanceof clarifying the natureof the dependentvariable,the welfare
state. A definitionfocusing on social expendituresfor transfersand services eas-
ily invites scholarsto consider explanationsin terms of general forces relatedto
structuraleconomic change. In the early decades after the end of WorldWarII,
scholars widely interpretedwelfare-stateexpansion as a result of the develop-
ment of industrialismgeneratinguniversallysharedneeds for a well-trainedand
internallydifferentiatedlabor force (Kerret al. 1964). Three decades later, an-
alysts have explained welfare-stateretrenchmentin terms of postindustrialism,
which via demographic and economic changes generates permanentausterity
and therebydrives retrenchment.Although it is obvious that both industrialism
and postindustrialismsignificantlychange the contexts and conditions for pol-
icymaking, the question is to what extent these changes basically alter the na-
tureof distributiveconflict in Westernsocieties. In the power-resourcesapproach,
viewing welfare states largely as outcomes of distributiveconflicts between ma-
jor interestgroups differentlyendowed in terms of assets to be used in markets
and in collective action via politics, conflicts concerningthe determinationof de-
mand for labor and levels of unemploymentemerge as key issues. Government
budgetarypressures,the central causal factor driving retrenchmentin the new-
politics perspective,is to a majorextentcorrelatedwith the rise in unemployment
levels.
The widely sharedview thatwelfare-stateregressin WesternEuropehas been
relatively limited partly reflects the fact that many scholars on welfare-statere-
trenchmenthave overlookedthe returnof mass unemployment,a centralfeature
of WesternEuropeanretrenchment.Furthermore,the widespreadreliance on ex-
pendituredatahas tendedto blurthe contoursof retrenchment.Althoughthe many
case studies of a single or a few countrieshave given very valuableclues to the
processesof retrenchment,suchinformationhas been difficultto forgeinto a larger
pictureof the extent andcauses of retrenchment.In this context dataon changesin
social rightsin social-insuranceprogramsprovidea complementto earlierstudies,
offering limited sets of well-definedcomparativemeasuresfor a large numberof
countriesand a relativelylong time period.Analyses based on such dataquestion
earlierinterpretationsof the extentandcauses of retrenchment.Thussince 1975 in
a handfulof Europeancountriescitizenshiprights in three main social-insurance
programshave changed in ways that must be describedas major retrenchment.
Differences in outcomes between earlier analyses and those based on social cit-
izenship rights are especially starkwhen it comes to Britain, a crucial test case
in the discussion on the extent and causes of retrenchment.In the debates on the
role of class-relatedpolitical parties in welfare-stateregress, analyses based on

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606 KORPI

social-rights data clearly supportthe hypothesis of a continuedrole of partisan

politics in the retrenchmentphase.
In discussions on the role of globalization and on Europeanintegrationfor
welfare-stateregress,conflictinghypotheseshave been advanced.Here, however,
consideringdifferentaspects of welfare states and theirinteractionsis necessary.
It can be arguedthata majorpartof the effects of globalizationand transnational
integrationon welfare-stateretrenchmenthas been focused on full employment,
one of the cornerstonesof the postwarEuropeanwelfare state,the undercuttingof
which in turnmay have effects on social insuranceandservices. The liberalization
of cross-bordercapital movementshas to a significantextent turnedthe tables to
the disadvantageof governmentsattemptingto safeguardfull employment.Within
the E.U., developmentslimiting the economic policy choices of governmentsin
membercountriesare also likely to have been significant.In the power-resources
perspective,the returnof mass unemploymentand attemptsto makecuts in social-
citizenshiprightsappearas a reworkingof the implicit social contractestablished
in WesternEuropeafterthe end of WorldWarII.

ACKNOWLEDGMENTS
For valuablehelp in workingwith this paperI want to thankEero Carroll,Stefan
Englund, Ingrid Esser, Tommy Ferrarini,Helena Htiig, Tomas Korpi, Ingalill
Montanari,JoakimPalme, Ola Sjiberg, and Stefan Svallfors.

The AnnualReviewof Sociologyis online at http://soc.annualreviews.org

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