Economic Openness, Job Insecurity, and the Welfare State: A Multilevel Analysis in 25 European Countries

Posted: 12 Jun 2008  

Ferry Koster

Erasmus University Rotterdam (EUR) - Faculty of Social Sciences; Tilburg University - TIAS School for Business and Society; University of Amsterdam - Amsterdam Institute for Advanced Labour Studies (AIAS)

Abstract

The compensation hypothesis is the most well known explanation of the empirical evidence showing a positive relationship between economic openness and the welfare state. This article argues that the core assumptions of the hypothesis can be tested with two hypotheses: (1) economic openness at the national level increases job insecurity at the individual level and (2) job insecurity at the individual level increases public spending at the national level. The combination of these two hypotheses should account for the positive relation between economic openness and public spending at the national level. Combining data from the European Social Survey (ESS), the KOF Index of Globalization, and the International Monetary Fund (IMF) allowed testing the two hypotheses on a sample of 25 European countries. The multilevel analysis shows no support for the hypotheses leading to the conclusion that the basic assumptions of the compensation explanation need to be reconsidered.

Keywords: Economic openness, globalization, job insecurity, KOF Index of Globalization, European Social Survey

Suggested Citation

Koster, Ferry, Economic Openness, Job Insecurity, and the Welfare State: A Multilevel Analysis in 25 European Countries. Available at SSRN: https://ssrn.com/abstract=1144120

Ferry Koster (Contact Author)

Erasmus University Rotterdam (EUR) - Faculty of Social Sciences ( email )

3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.ferrykoster.nl

Tilburg University - TIAS School for Business and Society ( email )

Warandelaan 2
TIAS Building
Tilburg, Noord Brabant 5037 AB
Netherlands

University of Amsterdam - Amsterdam Institute for Advanced Labour Studies (AIAS)

PLantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands

HOME PAGE: http://www.uva-aias.net

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