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Democratic Limits to Redistribution: Inclusionary versus Exclusionary Coalitions in the Knowledge Economy

  • Torben Iversen and David Soskice

The knowledge economy, deindustrialization, and the decline of Fordism have undermined the economic complementarities that once existed between skilled and semiskilled workers. The result has everywhere been a decline in coordinated wage bargaining and unionization and a notable rise in labor market inequality. Yet, the political responses have been very different across advanced democracies. While labor markets for part-time and temporary employment have been deregulated across the board, some countries have compensated losers through increased cash transfers and active labor market programs and others have allowed inequality and insider-outsider divisions to grow deeper. The article argues that the divergent government responses reflect differences in underlying electoral coalitions, and that these in turn mirror the structure of party and electoral systems. The authors support their argument with evidence for government responses to economic shocks in the period 1980 to 2010.

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* Earlier versions of this paper were presented at the Politics of the Economic Crisis Conference, Princeton University, March 27–28, 2010, and the annual meeting of the American Political Science Association, Toronto, September 3–6, 2009. We wish to thank Pablo Beramendi, Charlotte Cavaille, Peter Hall, Cathie Jo Martin, Alex Hicks, Jonas Pontusson, Philipp Rehm, Michael Shalev, and Kathleen Thelen, as well as four anonymous reviewers for many helpful comments and suggestions.

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World Politics
  • ISSN: 0043-8871
  • EISSN: 1086-3338
  • URL: /core/journals/world-politics
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