Accelerating Smaller Cutbacks to Delay Larger Ones? The Politics of Timing and Alarm Bells in OECD Pension Generosity Retrenchment

Abstract

This paper investigates the politics of delays in pension generosity cutbacks in 18 OECD democracies between 1981 and 1999 by using event history analysis. In the context of fiscal austerity, policymakers are assumed to have a strong incentive to manipulate the timing of cutbacks strategically. Investigating both medium and large cutbacks in ageing welfare states, we test whether, in addition to conventional demographic and economic variables, political-institutional variables capturing partisanship (political ideology), electioneering (political cycle), and institutional constraints (political rigidity) contribute to explain the timing of cutbacks. While the latter two factors are found not to have any significant effect on the timing of pension generosity cutbacks, more rightleaning governments tend to implement pension generosity cutbacks significantly earlier. Finally, we find almost mirror effects of unemployment and population aging: these socio-demographic variables tend to delay large-size cutbacks, but to accelerate medium-size cutbacks in pension generosity, possibly because they function as alarm bell signals urging policymakers to take still feasible incremental action through ‘muddling-through type’ retrenchment in order to delay more radical and politically highly risky retrenchment.

Keywords: blame avoidance, crisis politics, event history analysis, electioneering, partisanship, retrenchment delays, veto players