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Labor and the Elderly in the Welfare Retrenchment Era: Institutions and Collective Action in the Public Pension Reforms of Affluent Democracies


This dissertation seeks to explain cross-national differences in the evolution of public pension programs in 21 affluent democracies between 1980 and 2002. Despite a burgeoning literature, critical aspects of pension policy variations such as generosity levels and the passage of retrenching reforms have been inadequately or insufficiently analyzed. The first part of the dissertation describes the type of structural and gradual reforms passed during this period. It shows that most reforms were gradual. Only five countries overhauled their pension policies, while all countries introduced retrenching recalibrations of benefit or coverage levels. Thus, although pension policy has not been dismantled, it has been substantially redesigned across affluent democracies.

The second part of the dissertation explains cross-national variations in three pension policy dimensions. First are examined the reasons for the extensive differences in the generosity of old-age pensions for just-retired individuals. Using cross-sectional time-series regression techniques and pension replacement rates for fixed individuals, I show that the power of the elderly (and not class struggles) determined the level of pension generosity. Second, I conduct the first event history (EH) analysis of the passage of retrenching pension reforms. A synthetic review of the pension policy literature reveals that a total of 53 retrenching pension reforms were passed. Further, EH models demonstrate that high public deficits and the gap between the growth rates of social security outlays and revenues drove those retrenchments.

A third development during this period involved the enactment of structural pension reforms. To explain how one structural reform was possible, I compare the pension politics leading to the Italian 1995 transition to a notional-defined-contribution (NDC) system and the Spanish 1997 non-structural reform. Based on qualitative evidence, I argue that Italian union leaders sought and imposed the NDC model which eliminated regressiveness suffered by the unions' rank-and-file.

By contrast, Spanish union leaders did not seek alternative policy models because public sector workers dominated their rank-and-file and benefited from pension regressiveness. The final study examines attitudinal cleavages on pension policy preferences. It shows that a larger tax wedge and lower elderly poverty rate moderate the higher likelihood of the elderly to demand more pension spending. Thus, the U.S. lacks an age cleavage on pension policy preferences due to a lower tax wedge and higher elderly poverty rate.

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