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Giving less by doing more? Dynamics of social policy expansion and dismantling in 18 OECD countries
(2014)
Protection against social risks is generally popular among voters and should enjoy the benefits of institutional inertia. Yet retrenchment occurs rather frequently in advanced welfare states without this systematically leading to electoral punishment. We solve this paradox by, first, arguing that governments can avoid the blame of retrenchment by pursuing a strategy of expansionary dismantling' where new policies and instruments are used to compensate reform losers and to obfuscate cutbacks. Second, we test our argument with a huge new dataset consisting of changes in unemployment legislation and replacement rates in 18 OECD countries from 1976 to 2000. The statistical tests provide robust support for our argument, suggesting that the introduction of new policies and instruments leads to cutbacks in replacement rates. We also find that left-leaning governments are least likely to engage in expansionary dismantling.
The economic context for renewable power in Europe is shifting: feed-in tariffs are replaced by auctioned premiums as the main support schemes. As renewables approach competitiveness, political pressure mounts to phase out support, whereas some other actors perceive a need for continued fixed-price support. We investigate how the phase-out of support or the reintroduction of feed-in tariffs would affect investors' choices for renewables through a conjoint analysis. In particular, we analyse the impact of coordination - the simultaneousness - of policy changes across countries and technologies. We find that investment choices are not strongly affected if policy changes are coordinated and returns unaffected. However, if policy changes are uncoordinated, investments shift to still supported - less mature and costlier - technologies or countries where support remains or is reintroduced. This shift is particularly strong for large investors and could potentially skew the European power mix towards an over-reliance on a single, less mature technology or specific generation region, resulting in a more expensive power system. If European countries want to change their renewable power support policies, and especially if they phase out support and expose renewables to market competition, it is important that they coordinate their actions.