Globalization and the Welfare State Overview

Globalization & the Welfare State

• Globalization has led to changes in labor market flexibility, social investment, and welfare state dualization.
• The lecture discusses the role of the labor market, including flexibilization, and the role of the welfare state, considering retrenchment, expansion, and restructuring.
• The presentation explores the concept of "dualization" within this context.

Globalization and Income Distribution

• Globalization has increased over time, as measured by indicators like trade openness.
• The distribution of global income has also changed, with data from LCT3 & SEM3 showing variations across income percentiles.

In the West

• Recent trends within Western countries show slow economic growth.
• Income inequality within countries has increased, and lower-income groups are struggling.
• Data presented in figures show a rise in Gini coefficients indicating increased income inequality.

Explaining Rising Inequality

• Disposable income is derived from labor market income, less taxes and contributions, and social transfers.
• Labor market changes, such as greater flexibility, can influence wage inequality and hiring practices.
• Welfare state changes, influencing policies like active labor market policies or stricter social protection, also impact inequality.

Labour Market Flexibility

• Globalization has led to a shift from industrial to post-industrial knowledge-based labor markets.
• Offshore outsourcing has contributed to long-term structural unemployment, particularly among low-skilled workers.
• Solutions to these issues involve labor market flexibility to allow companies quick responses to market changes, decreasing macro economic risks, and safeguarding investments in countries.
• Flexibility takes various forms, including outsourcing, functional adaptation, wage adjustments, numerical change, and temporal adaptation.

Labour Market Flexibility - Extent and Location

• More than half of all jobs created since 1995 have been non-standard jobs, differing across countries.
• Fixed-term contracts have increased over time, varying significantly across countries.
• Countries display different levels of EPL (Employment Protection Legislation). EPL indexes are correlated with the share of temporary employment.

Labour Market Flexibility - Risk

• The prevalence of non-standard employment is a concern.
• The study examines whether non-standard employment is a stepping stone or a detrimental aspect of the labor market.
• The presentation examines how different aspects of non-standard employment correlate with income levels. The data looks at income insecurity versus income security.
• 'Exclusionary' vs. 'integrative' employment strategies are analyzed in the context of routine manual jobs.

Welfare State Response

• Traditional views on welfare state response, including efficiency and compensation hypotheses, are examined in the context of their suitability.
• The presentation argues that these older perspectives are overly simplistic and do not fully consider the dynamic interaction between globalization, the welfare state, and employment trends.
• Countries that are high on globalization index show a correlation to high social spending.

Globalization and Welfare State: Impact and Variations

• Researchers like Busemeyer (2009) and Nam (2020) study dynamic impacts and variations.
• Busemeyer's research analyzes the impact of globalization on welfare spending over time.
• Nam's analysis focuses on how welfare states compensate for distributional consequences of globalization, such as rising income inequality.

Welfare State Outcomes

• Studies indicate that the effects of globalization can vary significantly across countries.
• Results of analyses show positive effects of globalization on market income inequality, with lesser effects on disposable income inequality. Negative effects from welfare generosity are also observed.
• The effect of globalization on inequalities is also influenced by welfare states.

Dualization

• Dualization describes an incremental decline in inclusivity within labor markets and social insurance systems.
• It’s understood as a process of "1000 cuts" over time rather than a sudden restructuring.
• Factors contributing to this process include globalization, population aging, and others.
• Studies detail how welfare state origins, based on contributions and/or non-contributions from individuals, and associated social benefits can influence dualization.

Consequences and Variations

• Social polarization between winners and losers of globalization is a significant consequence.
• Variations in welfare state generosity among countries are analyzed.
• This shows both the impact of globalization's effects and the differing responses of welfare states to those impacts.
• Studies identify variations in policies, specifically between countries with more/less generous unemployment policies, and their impact on inequality.

Conclusion and Summary

• The impact of globalization on social risks has been primarily indirect, influenced through various interactive processes in differing countries and cultures.
• Existing inequality structures may be intensified due to globalization, potentially undermining the social contract that supports welfare systems.
• The need for a new social contract is proposed, to incorporate more global coordination to adequately address globalization related issues, yet this may be difficult to achieve.
• A revitalized discussion and understanding of 'dualization' in terms of how this process influences social risks due to globalization interactions within and across differing welfare states is highlighted.

This quiz explores the impact of globalization on the welfare state, examining changes in labor market flexibility, social investment, and income distribution. It also discusses the concept of dualization and recent trends in income inequality, particularly within Western countries. Participants will delve into data reflecting the changing dynamics of global income and welfare policies.