The Political Economy of Immigration and Welfare State Effort: Evidence from Europe 21 Economic Controls. The effect that a country’s domestic economic status may have on welfare state effort is controlled for using three key variables: GDP growth, the national unemployment rate, and female labour force participation. First, Gaston and Rajaguru (2013) find that GDP growth has a significant and negative association with social spending because “this reflects the fact that the denominator (GDP) grows more slowly than the numerator (SOCX) when the economy slows” (2013, p.95). For generosity, as the index is not constructed as a proportion of GDP, the effect may be different. Second, the unemployment rate is included as a control for the domestic labour market (OECD, 2017b). Higher unemployment would indicate more spending on unemployment benefits, but the fiscal cost may put pressure on generosity. Third, female labour force participation (OECD, 2017b), which is thought to affect welfare effort through increased public childcare infrastructure to support working mothers. Political Institutions. “One of the strongest generalisations that can be made about the origins and growth of the welfare state is that where trade unions and social democratic parties are strong, the welfare state has thrived” (Freeman, 1986, p. 61). It is generally thought that left-leaning governments, who traditionally have electoral ties to the working-class and unions, will support greater redistribution (Armingeon & Giger, 2008), although the importance of partisan politics is still debated (Pierson, 1996; Starke, Kaasch, & Van Hooren, 2014). Moreover, some authors find that a strong left or strong trade unions can counteract the potential negative effects of diversity on welfare generosity (Lipsmeyer & Zhu, 2011; Taylor-Gooby, 2005). As a result, the ideology of the government in power is controlled for by including the percentage of cabinet posts held by social democratic and other left-wing parties, weighted by the number of days in office in a given year (Armingeon et al., 2017). Additionally, trade union density, measured as net union membership as a share of wage and salary earners in employment, is used as a control for the bargaining power of domestic labour (Visser, 2016). Economic Globalisation and Deindustrialisation. Globalisation has been argued to both reduce public spending and increase it (Cerny, 1995; Rodrik, 1998). As Soroka et al. (2006, 2016) do not account for globalisation in their specification, then the example set by Gaston and Rajaguru (2013) is followed and the KOF economic globalisation indicator is used (Dreher, 2006). Conversely, Iversen and Cusack (2000) argue that it is deindustrialisation that leads to economic uncertainty and demand for compensation, not globalisation. Therefore, deindustrialisation is also accounted for. 2.3.4 Method and Model Specification This article uses pooled time-series cross-sectional analysis – a common practice is to use the de facto Beck-Katz standard, which combines fixed
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