De-industrialization and the Expansion of the Welfare State : A Reassessment

Abstract

In this chapter, Manow, Van Kersbergen, and Schumacher provide a long-run perspective on political responses to sectoral change. In particular, they compare deindustrialization and the rise of the service economy with the earlier transition from agriculture to industry, and analyze how welfare state responses have varied across these two, rather different, sectoral transformations. The authors show that countries entered the post-war era with very different sectoral employment shares and subsequently have been differently affected by sectoral change. They argue that for individuals to move from agriculture into industry in the 1950s and 1960s proved to be much easier than to move either from agriculture or industry into service employment in the subsequent decades. As a result, the extent and nature of welfare state response varied between the two periods. The authors illustrate this argument with an analysis of data from a set of fifteen OECD countries. They also examine the role of partisanship in mediating this transition. They show that in Scandinavian countries, the roots of the modern welfare state can be found in the political response of Social Democrats in coalition with agrarian parties, to the loss of agricultural employment in the 1950s and 1960s. In contrast, employment loss in manufacturing was crucial for the continental countries in the 1970s and 1980s and here Christian Democracy was the decisive political force managing (or failing to manage) the transition toward the service economy.