A key question in debates over globalization is its effect on the
welfare states in particular on welfare “retrenchments”:
programmatic retractions of the scope and coverage of social programs. We
conceptualize such retrenchments as discrete policy events; and we offer a
comprehensive model of their occurrence that integrates domestic economic,
political, and institutional factors as well as those related to the
global economy. Our analysis of all such retrenchments in Organization for
Economic Cooperation and Development (OECD) nations between 1978 and 1994
indicates that the effects of globalization are complex, with trade
openness and financial liberalization clearly operating against such
retrenchments but outward foreign direct investment perhaps pressuring for
them. In addition, we uncover support for a dynamic of
“self-limiting immoderation”: economic and demographic
pressures for costly welfare expenditures provoke actions to roll back
eligibility and benefit rates that link increasing numbers of unemployed
and retired persons to increased social spending. In short, the same
demographic pressures that gave often been noted to substantially drive
welfare spending may trigger welfare cutbacks.Our thanks to A. A. Alderson, Bob Jackman, Lane Kenworthy,
Joakim Palme, Duane Swank, John Stephen, and two anonymous reviewers for
their helpful comments and discussions, as well as to Kendralin Freedman
for her work preparing the final manuscript. All remaining errors are our
own. Previous versions of this article were presented at the Annual
Meetings of the American Political Science Association and the American
Sociological Association. The views expressed herein are those of the
authors and do not reflect the opinions of the National Science Foundation
or the U.S. government. All data and commands necessary to replicate the
analyses presented here are available at our Web site
〈http://polisci.emory.edu/zorn/HZ/index.html〉.