The finance-welfare state nexus. ACES Cases No. 2013.1

At the height of the financial crisis, the Western welfare state prevented a repeat of the Great Depression. But there were also suggestions that social policy had contributed to the crisis, particularly by promoting households’ access to credit in pursuit of welfare goals. Others claim that it was the withdrawal of state welfare that led to the disaster. Against this background that motivated our interest, we propose a systematic way of assessing the relationship between financial market and public welfare provisions. We use structural vector auto-regression to establish the causal link and its direction. Two hypotheses about this relationship can be inferred from the literature. First, the notion that welfare states ‘decommodify’ livelihoods or that there is an equity-efficiency tradeoff would suggest that welfare states substitute to varying degrees for financial market offers of insurance and savings. By contrast, welfare states may support private interests selectively and/or help markets for households to function better; thus the nexus would be one of complementarity. Our empirical strategy is to spell out the causal mechanisms that can account for a substitutive or complementary relationship and then to see whether advanced econometric techniques find evidence for the existence of either of these mechanisms in six OECD countries. We find complementarity between public welfare (spending and tax subsidies) and life insurance markets for four out of our six countries, notably even for the United States. Substitution between welfare and finance is the more plausible interpretation for France and the Netherlands, which is surprising. Data availability constrains us from testing the implications for the welfare state contribution to the crisis directly but our findings suggest that the welfare state cannot generally be blamed for the financial crisis.

Images of Europeans: In-Group Trust and Support for European Integration. Jean Monnet/Robert Schuman Paper Series Vol. 14 No. 3, March 2014

Prior research on citizen support for European integration does not consider how individuals’ evaluations of European nationalities are associated with support. This paper fills this gap by developing a political cohesion model based on social identity theory. I claim that the probability of supporting integration increases with greater levels of trust in fellow Europeans, which assumes to reflect their positive images. Also, trust in eastern European Union nationalities has the highest impact on the probability for support, followed by trust in the southern nationalities, and then northern nationalities due to the eastern and southern nationalities relatively lower economic development. Controlling for various factors, the ordered logistic regression analysis of the European Election Study (2004) data support these claims.

The European Power Hierarchy, Member State Trust, and Public Support for the Common Security and Defense Policy. Jean Monnet/Robert Schuman Paper Series Vol. 15 No. 2, August 2015

Existing studies focus on overall support for European integration while less work has been done on explaining public opinion on specific policy areas, such as the development of the Common Security and Defense Policy (CSDP). We hypothesize that the probability of supporting a CSDP increases with greater levels of trust in the European Union member states, most notably the more powerful members. This variable is critical since integration’s development is influenced strongly by, and dependent on, the resources of the relatively more powerful European member states. Binary logistic regression analyses using pooled repeated cross-sectional data from the Eurobarometer surveys conducted from 1992 to 1997 among individuals of 11 member states largely support these claims.