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- Essay Question- Do electoral systems affect the levels of welfare expenditure? A

comparison of the USA and Sweden.

- Candidate Number- R20395

- Module Code- 7SSPP002

- Word Count- 1,500















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Introduction
The rise and expansion of the welfare state in the post war-era and its eventual retrenchment
after the oil shocks of the 1970s, alongside the large variance between welfare nations in
welfare expenditure and allocation, has created a large debate on what exactly determines the
extent and provision of welfare. Indeed, in 1995, the percentage of government spending on
social programmes varied substantially across nations. For example, in 2009, the welfare
expenditure was 33% of GDP in Sweden and only 15.8% in the USA. More specifically, in
the USA the unemployed received one third or less of a working persons income whereas in
Sweden the unemployed receive nearly 70% of the working income level (Dodds, 2013). It
has been argued by many that welfare expenditure levels and development are positively
correlated with industrialization and economic modernization (Wilensky, 1975).

The aim of this paper is to show that modernization is not the only, or even primary, factor in
welfare provision levels. Instead political institutions and, more specifically, electoral
systems are a definitive influence on welfare expenditure. To achieve this I shall focus on
welfare expenditure in two developed Western nations; the USA and Sweden.

Research Question
The aim of this paper is to analyse why democratic states have differing levels of welfare
expenditure and allocation. There are a number of theories regarding welfare state
expenditure however mine focuses on the democratic institutions at work in a welfare state.
More specifically I focus on the electoral systems and how these can help or hinder the power
attributed to left parties and trade unions (Esping-Andersen, 1990. Lijpart, 1994).
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Literature Review
There is still no consensus on how political institutions matter for welfare spending in
industrialized democracies (Hicks & Swank, 1992). The early consensus, propounded by
Wilensky (1975), was that welfare expenditure levels and development were positively
correlated with industrialization and economic modernization (Dodds, 2013). This is
primarily because there is a growing dependence on wage labour which, in turn, creates new
susceptibilities among those within society who have little or no labour to sell, for example,
the sick, the young or the old (Myles & Quadango, 2002).

This early thesis asserts that the creation and enlargement of welfare expenditure is the
product of large, impersonal, economic forces and that modernization shapes the social,
economic, and political institutions of industrialized societies (Pampel & Williamson, 1988).
In a sense it implies an automatic process in which need of support translates directly into
spending (Pampel & Williamson, 1988, p. 1427). Pampel & Williamson (1988) assert that
evidence for modernization effects on welfare are often based on samples of low income and
high income nations combined but it needs to show that the predicted outcome comes about
in a more homogenous group of developed countries. Hence why I shall compare two
western nations who are relatively equally modernized; the USA and Sweden.

I will show that the modernization thesis cannot determine the size of the welfare state, its
means of funding, or its choice of client population (Blau, 1989). In other words, it does not
explain why there is a systematic difference in welfare spending and coverage across nations
(Quadango, 1987). Collier & Messick (1975) showed in a sample of 59 non-socialist nations,
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that the least modernized created a programme of social security with less than $51 per capita
income and less than 5% of the workforce in industry (Collier & Messick, 1975. Quadagno,
1987). In a sense even nations that are not nearly as modernized as other western nations can
still create a limited welfare system. Secondly, the development of new vulnerabilities in the
population doesnt automatically lead to improved welfare expenditures as the policy needs
to be enacted first, however this is assumed under the modernization thesis (Pampel &
Williamson, 1988). The enactment of this policy is influenced by the electoral rules of the
nation and this is ignored by purely economic theories of modernization and welfare.

The systematic difference between nations can be understood through a comparative analysis
of welfare regimes and these do show domestic political influences on welfare spending. The
importance placed on parties and the power of the left has a wide literature (Esping-
Andersen, 1990). Williamson & Weiss (1979) show that labour union strength, as well as
socialist or left wing party power, has a significant effect on the development of the welfare
bureaucracy. Esping-Andersen (1990) argued that the differences between certain welfare
states can be attributed to the level of de-commodification they induce, and the type of social
stratification they employ (Dodds, 2013, p.87). The causes for the different levels of de-
commodification and social stratification are attributed to the strength of the trade unions and,
more importantly, left parties (Esping-Andersen, 1990). However, the consensus regarding
the importance of democratic political institutions, such as electoral systems, on the levels of
welfare spending is small (Hick & Swank, 1982).

An electoral system is the set of rules that structure how votes are cast at elections for a
representative assembly and how these votes are then converted into seats in that assembly
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(Gallagher & Mitchell, 2009, p.3). Lijphart (1994) shows how an electoral system can
influence the welfare expenditure of a state through an analysis of proportional representation
and majoritarian election systems. He shows legislatures elected under proportional electoral
systems spend much more on welfare compared to majoritarian election systems, on average,
the difference is 8% of GDP (this shrinks to 2-3% when controlling for other determinants
such as per capita income, demographics, the age of the democracy etc.) (Persson &
Tabellini, 2006). This is primarily due to the larger number of coalitions and multi-party
systems that seem to increase welfare expenditure (Persson & Tabellini, 2006). This can be
seen in the difference between electoral systems in the USA and Sweden where the
majoritarian electoral institution of the USA prevents minorities from gaining political
influence whereas in Sweden proportional representation played an important role in the
growth of socialist parties (Alesina, Glaeser, & Sacerdote, 2001). Electoral systems affect
how votes are turned into seats and alternative systems will tend to create a different party
structure within the policy-process. It is not hard to imagine that alternative electoral systems
will have an influence on party structure which will, in turn, affect welfare expenditure.

Justification
In a time of recession and welfare retrenchment the study of what influences welfare
spending is a crucial one. Also the recent changes of electoral systems in Italy and New
Zealand alongside the swathe of democratization going on through Africa, Eastern Europe
and Latin America means there is a growing need to know exactly how these electoral
systems influence the spending of the nations adopting it.

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Methodology
The paper will seek to analyse the welfare expenditure levels of the USA and Sweden. The
main thrust of my paper is that the electoral system itself has a large impact on how much a
state spends on welfare provisions as well as how it allocates to different welfare needs. I
have chosen two countries because it will provide an in depth analysis of the dependent
variable in each country (welfare expenditure) and how the independent variable (the
electoral system) influences this expenditure.

One of the major challenges of comparative research is proving causation between the
variables and the observation or outcome within the nation (Landman, 2000, p. 31). If there
are more independent variables than countries then I run the risk of not fully proving that the
independent variable actually causes the outcome which would lead to an indeterminate
research design (Landman, 2000, p. 30). This is the primary reason why I have chosen to
study one independent variable.

There are a number of determinants that can influence a countries welfare spending levels.
These include per capita income, demographics, the age and quality of democracy etc.
However the modernization thesis also contends that the modernization of a country will
affect its welfare expenditure and this is why I have chosen the USA and Sweden as they are
both developed and modernized Western nations. I shall be using a Most Similar Systems
Design approach (MSSD) to control these other determinants so I can gauge a clear result of
the effect the electoral system has on welfare spending. I do not mean to say that these other
factors do not influence levels of social expenditure but the MSSD framework will control
the factors that are similar across the countries being studied, while focussing on only those
factors that are different that account for the outcome (Landman, 2000, p. 32).
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To measure the countries welfare effort we will measure the ratio of welfare spending to
gross domestic product as it is highlighted in Hicks & Shank (1992) and is calculated with
the International Labour Organization expenditure (ILO) figures and gross domestic product
research figures (Hicks & Shank, 1992).

To conclude, I shall be analysing the different levels of welfare expenditure, which is my
dependent variable, through the difference between the electoral systems of the USA and
Sweden. These electoral rules are my independent variable.
















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Bibliography

- Alesina, A. Glaeser, E. Sacerdote, B. (2001) Why Doesnt the United States Have a
European-Style Welfare State? Brookings Paper on Economic Activity 2: pp. 187-227.
- Blau, J. (1989) Theories of the Welfare State. Social Service Review, 63(1): pp. 26-38.
- Collier, D. Messick, R.E. (1975) Prerequisites versus diffusion: Testing alternative
explanations of social security adoption. American Political Science Review 69(4): pp.
1299-1315
- Dodds, A. (2013) Comparative Public Policy. Palgrave Macmillan
- Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism. Cambridge:
Polity Press.
- Gallagher, M. Mitchell, P. (2009) The Politics of Electoral Systems. Oxford: Oxford
University Press.
- Hicks, A.M. Swank, D.H. (1992) Politics, Institutions, and Welfare Spending in
Industrialized Democracies, 1960-82. The American Political Science Review, 86(3):
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- Landman, T. (2000) Issues and Methods in Comparative Politics. London: Routledge.
- Lijphart, A. (1994) Democracies: Forms, Performance, and Constitutional
Engineering. European Journal of Political Research, 25(1): pp. 1-17.
- Myles, J. Quadagno, J. (2002) Political Theories of the Welfare State. Social Service
Review, 76(1): pp. 34-57.
- Pampel, F.C. Williamson, J.B. (1988) Welfare Spending in Advanced Industrial
Democracies, 1950-1980. American Journal of Sociology, 93(6), pp. 1424-1456.
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- Persson, T. Tabellini, G. (2006) Electoral System and Economic Policy. In: Weingast,
B.R. Wittman, D.A. (2006) The Oxford Handbook of Political Economy. Oxford:
Oxford University Press.
- Quadagno, J. (1987) Theories of the Welfare State. Annual Review of Sociology,
13(1): pp. 109-128.
- Wilensky, H. (1975) The Welfare State and Equality. Berkley: University of
California.