institutional adaptability in china local developmental models under changing economic conditions summary distinct patterns of regional development have emerged in china s political economy since the initiation of economic reforms in late 1970s in particular the localities of suzhou wenzhou and dongguan each achieved dramatic economic growth during the first three decades of reform earning them national reputations as developmental models for other cities in china to recognize and emulate however the local states of suzhou wenzhou and dongguan responded differentially to changing conditions in the broader domestic and global economy and the global financial crisis at the end of the 2000s affected the three localities with varying levels of severity this article thus seeks to explain why previously well performing developmental models diverged in their performance and capacity to recover from a major economic shock drawing on national economic census data in depth field interviews and relevant secondary literature we argue that variation in the institutional adaptability of suzhou wenzhou and dongguan throughout the course of their developmental experiences had a defining effect on how these cities fared during the financial crisis the process tracing case studies reveal that a locality s ability to adjust to changing market conditions may be conditioned by structural endowments but ultimately hinges on agent centric factors including motivated and capable local leadership openness to new policy ideas and state capacity for policy implementation ultimately our analysis makes the broader observation that in a dynamic environment factors that promote economic success at one point can become barriers later on hence exploring a region s institutional adaptability and identifying the factors that facilitate or impede such adaptability in local economic governance provides a more nuanced means for understanding a locality s evolving developmental patterns and performance during normal times as well as more challenging periods

the real but limited influence of expert ideas a number of influential studies in political science argue that important economic policy changes in the rich democracies since the mid 1970s were caused by the introduction of new economic ideas this article claims that while experts exert strong influence over the selection of policy instruments their influence over the formulation of policy objectives is much weaker in the 1970s 1980s and 1990s the predominance of keynesianism in austria and denmark did not lead austrian and danish governments to maintain low unemployment longer than sweden where keynesianism was less strong but it did lead them to regard fiscal policy as an instrument that can be used to control the level of activity in the economy while their swedish counterparts relied instead on exchange rate and monetary policy

spillovers from the usa to stock markets in asia a quantile regression approach this article analyses return spillovers from the usa to stock markets in asia by means of quantile regressions traditional studies consider spillovers as effects of the conditional means of foreign returns onto the conditional means of chronologically succeeding domestic markets returns we by contrast study the full range of quantiles of the conditional distribution of the domestic markets returns this enables us to document the detailed structure of spillovers across return quantiles generally we find spillovers from the usa to asia to be negative specifically however we reveal an asymmetric structure of spillovers with an increasing negative magnitude from lower to upper return quantiles theoretically this pattern is consistent with an asymmetric overreaction of traders in asia to news from the us market extensions from the baseline model further suggest the presence of contagion throughout the financial crisis of 2007 2008 as well as of calm down effects over weekends

equality employment and budgetary restraint the trilemma of the service economy this article presents an analysis of the postindustrial economy from a political economy perspective it identifies a set of specific distributional trade offs associated with the new role played by the services sector as the chief source of employment growth in advanced democracies over the last three decades it is argued that three core policy objectives budgetary restraint wage equality and expansion of employment constitute a political trilemma that allows only two of the goals to be successfully pursued at the same time using a combination of statistical and case oriented analysis the authors demonstrate the political and economic salience of the trilemma the distributional tensions inherent in each strategy to cope with it and the political institutional constraints under which these strategies are chosen

a public choice model of trade union behaviour and membership it is commonly assumed in the microeconomic literature concerned with trade union behaviour that the union maximises an aggregate utility function defined over homogeneous individuals and that the level of membership is fixed the purpose of this paper is to relax these two assumptions it is suggested below that trade unions may usefully be treated as political organisations comprising heterogeneous individuals and that the effects of union wage policies on the level of membership should be explicitly incorporated into the model consider first the assumption that the union is a homogeneous organisation this is often a convenient simplification but observation of the behaviour and government of trade unions suggests it is hardly realistic trade unions in the united kingdom are large groups based on a complex organisational structure comprising an executive a shop steward system and a body of rank and file members once the union is considered as a complex organisation the question arises as to how members preferences are transmitted through the hierarchical levels each of which may have conflicting aims there are two polar theoretical approaches to this question in the industrial relations literature clegg i980 at one extreme unions are seen as oligarchies unresponsive to members wishes full time officials it is argued secure a monopoly of power to stay in office with the assistance of low membership participation and apathy at the other extreme unions are regarded as organisations which are quasi democratic due to the presence of informal parties or factions the growth of workplace organisation and the existence of voting and postal or workplace balloting these two polar approaches to trade unions as large organisations may be linked up to parallel economic analyses of organisations if it is believed that trade unions are oligarchies then it may be enlightening to apply to unions economic models of bureaucracy or models of the firm comprising both shareholders and management alternatively if it is believed that trade unions are democratic organisations then public choice behavioural models may be enlightening the public choice model is chosen in this paper in preference to modern theories of the firm or of bureaucracies because it is believed that the public choice model represents a closer first approximation to trade union behaviour in the united kingdom although of course some particular unions may better fit the oligarchic model the second major concern of this paper is to relax the assumption of a fixed level of union membership the use of a fixed membership assumption in the

diverging solidarity labor strategies in the new knowledge economy the transition from fordist manufacturing to the so called knowledge economy confronts organized labor across the advanced market economies with a new and more difficult landscape many scholars have suggested that the future of egalitarian capitalism depends on forging new political coalitions that bridge the interests of workers in the new and old economies this article explores current trajectories of change in denmark and sweden two countries that are still seen as embodying a more egalitarian model of capitalism the authors show that labor unions in these countries are pursuing two quite different strategies for achieving social solidarity the danish aimed at equality of opportunity and the swedish aimed at equality of outcomes the article examines the origins of these different strategic paths and explores the distinctive distributional outcomes they have produced the conclusion draws out the broad lessons these cases hold for the choices currently confronting labor movements throughout the advanced industrial world

top income shares in the long run an overview this paper offers an overview of what we have learned from a collective research project on income distribution in the long run using historical income tax statistics and a common methodology we have constructed annual top income shares series often broken down by income source for over 20 countries covering most of the 20th century one important con clusion is that the decline in income inequality that took place during the first half of the 20th century was mostly accidental and does not seem to have much to do with a kuznets type process top capital incomes were hit by major shocks during the 1914 1945 period and were never able to fully recover from these shocks probably because of the dynamic impact of pro gressive income and estate taxation our database also allows us to readdress the cross country analysis of the interplay between inequality and growth with better prospects than with standard databases jel d31

cross country performance of levy regime switching models for stock markets abstractthis article compares the performance of regime switching levy models across sixteen 16 international stock markets from a cross country perspective the empirical application is dedicated to the study of equity markets in the americas asia and europe the results are of interest for a financial audience in order to document the sensitivity of stock indexes to the intensity of jumps under changing economic regimes expansion or recession we pick up singularities in japan and malaysia compared to other countries and regions of the world

the sources of business interest in social insurance sectoral versus national differences when and why have employers supported the development of institutions of social insurance that provide benefits to workers during various employment related risks the analysis developed in this article challenges the dominant explanations of welfare state development which are premised on the assumption that business opposes social insurance the article examines the conditions under which self interested profit maximizing firms support the introduction of a new social policy and it specifies the most significant variables explaining the variation in employers social policy preferences the model is tested in three political episodes of welfare state development in france and germany using policy documents submitted by various employers associations to bureaucratic and parliamentary commissions

political partisanship and welfare state reform in advanced industrial societies in this article we evaluate two claims made in recent studies of the welfare states of advanced industrial societies first that welfare states have remained quite resilient in the face of demands for retrenchment and second that partisan politics have ceased to play a decisive role in their evolution addressing the first claim we present analysis from a new data set on unemployment insurance and sickness benefit replacement rates for 18 countries for the years 1975 99 we find considerably more evidence of welfare retrenchment during the last two decades than do recent cross national studies second we examine the end of partisanship claim by estimating the effects of government partisanship on changes in income replacement rates in sickness and unemployment programs our results suggest that contrary to claims that partisanship has little impact on welfare state commitments traditional partisanship continues to have a considerable effect on welfare state entitlements in the era of retrenchment

distribution and redistribution in postindustrial democracies this paper analyzes the processes of distribution and redistribution in post industrial democracies we combine a pooled time series data base on welfare state effort and its determinants assembled by huber ragin and stephens 1997 with data on income distribution assembled in the luxembourg income survey lis archive in the case of the lis data we re calculate the micro data in order to remove the distorting influence of pensioners on pre tax pre transfer income distribution we examine the determinants of three dependent variables pre tax pre transfer income inequality post tax post transfer income inequality and the proportional reduction in inequality from pre to post tax and transfer inequality we hypothesized that pre tax pre transfer income inequality would be determined by labor market institutions union density bargaining centralization labor market conditions unemployment and economic structures post industrialism third world imports we hypothesized that the reduction in inequality would be determined by political configurations directly by left government and indirectly via their effect on welfare state generosity by left government and christian democratic government post tax and transfer income inequality was hypothesized to be a product of the combination of labor market variables and political variables the results broadly confirms our hypotheses and the overall fit is very good

the political economy of government domestic expenditure in the affluent democracies 1960 80 despite the large number of studies of the determination of government expenditure in the affluent democracies most students of the subject admit that we know relatively little about the complex dynamics of spending change using multiple regression analyses of changes in nonmilitary outlays over the years 1960 to 1973 and 1973 to 1980 this study attempts to remedy some of the problems in the literature by providing new tests of several old hypotheses by introducing and testing several relatively new hypotheses and by evaluating such propositions in the context of an integrated theoretical framework and of analyses that span two distinct political economic eras results suggest that the dynamics of domestic expenditure change are partially conditioned by macroeconomic and political environments of particular eras overall the self interests and ideological preferences of policymakers the institutional and extrainstitutional political action of policy relevant groups and needs for state assistance emerge as principal sources of changes in domestic expenditure

employers and the welfare state the political economic organization of firms and social policy in contemporary capitalist democracies the authors argue that the organization of employers shapes social policy support among firms and in turn affects social policy outcomes specifically the authors argue that the centralization and cohesion of employer groups and economic cooperation across enterprises positively affects social welfare provision empirically the authors assess the impacts of business organization on social welfare effort in 15 developed democracies between the 1970s and 1990s the authors also provide analysis of the impact of employer organization on active labor market policy the authors find that the organization of employers is one of the most important determinants of overall social welfare effort the authors also find that employer organization affects the development of active labor market policies and it influences the degree to which social democratic parties pursue active labor market programs the authors conclude with a discussion of the findings implications for theories of social corporatism and the w

power resources and employer centered approaches in explanations of welfare states and varieties of capitalism protagonists consenters and antagonists the power resources approach underlining the relevance of socioeconomic class and partisan politics in distributive conflict within capitalist economies is challenged by employer centered approaches claiming employers and cross class alliances to have been crucial in advancing the development of welfare states and varieties of capitalism theoretically and empirically these claims are problematic in welfare state expansion employers have often been antagonists under specific conditions consenters but very rarely protagonists well developed welfare states and coordinated market economies have emerged in countries with strong left parties in long term cabinet participation or in countries with state corporatist institutional traditions and confessional parties in intensive competition with left parties

book to market components future security returns and errors in expected future earnings this study investigates whether the ability of book to market to predict returns derives from systematic errors in the market s expectation of future earnings we extend beaver and ryan 1996 2000 by decomposing book to market into a more persistent bias component and a delayed recognition lag component we find that both components are related to analyst expectations of future earnings but the lag component is the dominant factor across all forecast horizons similarly we find that the lag component explains most of the inverse relation between book to market and future returns given that lag is constructed by regressing book to market ratios on lagged price changes our results are consistent with the lag component capturing systematic stock price reversals we find that the components have unique relations with subsequent earnings forecast revisions and controlling for these relations substantially mitigates the components ability to predict returns our component level analysis provides insight into how expected future earnings summarized in book to market ratios help to explain this market anomaly

institutional choices and labor market policy a british swedish comparison focusing on employment exchange systems the authors explain how early labor market institutions established by british and swedish governments affected the possibilities for subsequent policy they demonstrate how the way in which labor exchanges were implemented in britain and sweden limited and facilitated respectively active labor market policy after 1945 the absence of institutional legitimacy in the legacy of the british labor exchange system contrasts with the legitimacy achieved by the swedish system the authors identify the reasons for this comparative pattern and analyze its significance

from sectoral linkages to class conflict trade and coalition formation in britain prior to and after world war i although the sectoral framework on global commerce and coalition formation provides a better explanation of trade and political alignments in pre 1914 britain than the stolper samuelson framework it shares the main shortcoming of the latter when applied to the interwar period neither approach explains the restructuring of politics along class lines after 1918 according to the sectoral framework the continued imperfect mobility of capital and labor and deeper divisions within the business community should have led to greater not less cross class cooperation over trade and trade related issues this article extends an earlier critique of the stolper samuelson framework to address this puzzle it argues that weak worker trade union organization modifies the incentive of business owners to align with labor on trade even when imperfect capital mobility and divisions in the business community heighten the incentive of capitalists to form lobbying coalitions with labor in addition to addressing the marke

bringing capital back in or social democracy reconsidered employer power cross class alliances and centralization of industrial relations in denmark and sweden the political domination of social democrats in denmark and sweden beginning in the 1930s was stabilized by the absence of intense opposition by capital to reformist programs aggressively opposed by business and the right elsewhere in the world this quiescence was not a symptom of weakness or dependency rather it was a product of a class intersecting cross class alliance behind institutions of centralized industrial relations that served mutual interests of sectoral groupings dominating both union and employer confederations well organized and militant and backed by social democrats employers in the two countries used offensive multi industry lockouts to force centralization on reluctant unions analysis of these cross class alliances and their pay distributional objectives is used to challenge a widely held view that centralization and social democratic electoral strength are sources of power against capital it also occasions a reassessment of conventional understandings of farmer labor coalitions and the decline of industrial conflict in scandinavia in the 1930s according to the alternative view presented here capital was included rather than excluded from these cross class alliances and industrial conflict subsided dramatically in part because employers achieved politically what they had previously tried to achieve with the lockout

distribution and redistribution the shadow of the nineteenth century the authors present an alternative to power resource theory as an approach to the study of distribution and redistribution while they agree that partisanship and union power are important they argue that both are endogenous to more fundamental differences in the organization of capitalist democracies specifically center left governments result from pr consensus political systems as opposed to majoritarian systems while strong unions have their origins in coordinated as opposed to liberal capitalism these differences in political representation and in the organization of production developed jointly in the early twentieth century and explain the cross national pattern of distribution and redistribution the clusters have their origins in two distinct political economic conditions in the second half of the nineteenth century one in which locally coordinated economies were coupled with strong guild traditions and heavy investment in cospecific assets and one in which market based economies were coupled with liberal states and more mobile assets

the information content of earnings and prices a simultaneous equations approach abstract the price earnings relation can be characterized as a system of simultaneous equations earnings and prices can behave as if they are both endogenously determined because they are jointly affected by information that is difficult to specify explicitly specification tests provide evidence that both earnings changes and price changes are endogenous the price and earnings coefficients increase from ols to joint estimation and under a restrictive set of assumptions provide increasingly similar estimates of the permanent component of earnings the evidence is consistent with the contention that a portion of the single equation bias can be mitigated via joint estimation

wage inequality and varieties of capitalism this article draws on a new data set that enables the authors to compare the distribution of income from employment across oecd countries specifically the article conducts a pooled cross sectional time series analysis of the determinants of wage inequality in sixteen countries from 1973 to 1995 the analysis shows that varieties of capitalism matter the authors find that the qualities that distinguish social market economies from liberal market economies shape the way political and institutional variables influence wage inequality of particular interest to political scientists is the finding that the wage distributive effects of government partisanship are contingent on institutional context union density emerges in the analysis as the single most important factor influencing wage inequality in both institutional contexts

does the organization of capital matter employers and active labor market policy at the national and firm levels does the organization of business matter for social policy development in the advanced capitalist democracies conventional welfare state analysis has given this significant question scant attention we argue however that the representational power of business coordination across business interest units and integration of associations in corporatist policy making forums or what we call the social corporatist organization of business should result in greater support and participation by employers in social policy formation and implementation we test our arguments with models both of 1980 98 pooled time series data on withinand across country variation in spending on active labor market programs and of extensive firm level survey data from denmark and the united kingdom we find that the centralization and coordination of employers as well as the integration of employer organizations in corporatist policy making forums are strongly associated with shares of national income devoted to active labor market policy we find moreover that the degree of employer organization conditions active labor market policy responses to de industrialization and increases in general unemployment at the firm level membership in an employer association has a significant positive effect on employer participation in active labor market programs in corporatist denmark but not in the pluralist united kingdom

cooperation and political economic performance in affluent democratic capitalism research on comparative political economic performance has traditionally followed two separate tracks one concerned with collective economic gain growth and efficiency and the other focused on distribution and redistribution cooperative institutions offer a key to understanding cross national variation among the affluent capitalist democracies in both facets of political economic performance these institutions cluster along two dimensions neocorporatism and firm level cooperation pooled time series analysis for 18 nations over 1960 89 suggests that 1 neocorporatism is a major source of distributive redistributive policies and outcomes and of several sources of collective gain 2 firm level cooperation is a key contributor to economic growth

gonna party like it s 1899 party systems and the origins of varieties of coordination this article explores the origins of peak employers associations to understand why countries produce highly centralized macrocorporatist groups weaker national associations but stronger industry level groups or highly fragmented pluralist associations the authors suggest that the structure of partisan competition played a vital causal role in the development and evolution of these peak associations the leadership for peak employers association development came from business oriented party activists and bureaucrats who sought both to advance industrial development policy and to solve specific problems of political control business oriented party leaders and bureaucrats in both predemocratic and democratic regimes feared the rising tide of democracy and labor activism and viewed employer organization as a useful tool for political control to secure parliamentary advantage and to serve as a societal counterweight to workingclass activism because leadership for association building came from the state the political rules of the game were crucial to outcomes the structure of party competition and state centralization shaped incentives for strategic coordination for both political actors and employers dedicated business parties were more likely to develop in countries with multiparty systems and limited federal power sharing than in countries with two party systems and federalism in a multiparty context where no single party was likely to gain power each party had an incentive to cooperate with other social groups moreover business oriented party leaders and bureaucrats in multiparty systems were motivated to delegate policy making authority to coordinated societal channels for industrial relations because they anticipated that employers would win more in these channels than in parliamentary settings where the center and left could form a coalition against the right again centralized party systems were more likely than federal ones to develop a dedicated national business party that transcended regional cleavages and to retain a strong role for the state in the governance of industrial relations

business and welfare state development why did employers accept social reforms in recent years employer centered explanations of welfare state development have begun to challenge conventional labor centered and state centered explanations these new explanations suggest that sector specific business interests and cross class alliances propelled the adoption and expansion of social programs the business interests thesis this article presents a novel explanation of differences in business support for welfare state expansion based on a diachronic analysis of the german case and shadow case studies of sweden and the united states the article suggests that when looking at changes in employers positions across time rather than across sectors political constraints turn out to be the central factor explaining variation in employers support for social reforms the political accommodation thesis the article identifies two goals of business intervention in welfare state development pacification and containment in the case of pacification business interests propel social policy expansion in the case of containment they constrain it business chooses pacification when revolutionary forces challenge capitalism and political stabilization thus becomes a priority business chooses containment when reformist forces appear likely to succeed in expanding social protection and no revolutionary challenge exists the article shows that changes over time in the type of political challenges that business interests confront best explain the variation in business support for labor friendly social reforms

increasing returns path dependence and the study of politics it is increasingly common for social scientists to describe political processes as path dependent the concept however is often employed without careful elaboration this article conceptualizes path dependence as a social process grounded in a dynamic of increasing returns reviewing recent literature in economics and suggesting extensions to the world of politics the article demonstrates that increasing returns processes are likely to be prevalent and that good analytical foundations exist for exploring their causes and consequences the investigation of increasing returns can provide a more rigorous framework for developing some of the key claims of recent scholarship in historical institutionalism specific patterns of timing and sequence matter a wide range of social outcomes may be possible large consequences may result from relatively small or contingent events particular courses of action once introduced can be almost impossible to reverse and consequently political development is punctuated by critical moments or junctures that shape the basic contours of social life

a model of accrual measurement with implications for the evolution of the book to market ratio this paper constructs a model of accrual measurement and tests its implications for the evolution of the book to market ratio the model captures the intuition that book value is untimely or smoothed relative to market value so that movements in market value have relatively high variance and low predictability compared with movements in book value empirical tests of the model use lagged market value changes to forecast the mean reversion of the book to market ratio this paper complements recent research investigating the role of book to market ratios in security analysis accounting theorists e g edwards and bell 1961 and feltham and ohlson 1995 have long recognized the critical role of book to market ratios as predictors of abnormal earnings in earnings based valuation models tests of such valuation models e g ou and penman 1993 confront the practical problem of determining the horizon beyond which abnormal earnings are expected to be zero the model in this paper implies that this horizon is determined by the remaining useful life of assets and that the expected path of abnormal earnings over this horizon reflects the pattern of expiration of the useful lives of assets in place

the causes of welfare state expansion deindustrialization or globalization an influential line of argument holds that globalization causes economic uncertainty and spurs popular demands for compensatory welfare state spending this article argues that the relationship between globalization and welfare state expansion is spurious and that the engine of welfare state expansion since the 1960s has been deindustrialization based on cross sectional time series data for fifteen oecd countries the authors show that there is no relationship between globalization and the level of labor market risks in terms of employment and wages whereas the uncertainty and dislocations caused by deindustrialization have spurred electoral demands for welfare state compensation and risk sharing yet while differential rates of deindustri alization explain differences in the overall size of the welfare state its particular character in terms of the share of direct government provision and the equality of transfer payments is shaped by government partisanship the argument has implications for the study and the future of the welfare state that are very different from those suggested in the globalization literature

social democracy christian democracy constitutional structure and the welfare state the literature on the determinants of welfare state effort displays many inconsistencies and contradictins this article takes imoprtant stepts toward resolving these issues with the use of pooled

reinventing welfare regimes employers and the implementation of active social policy denmark and britain have adopted quite similar active social reforms in which employers play a major role in the programmatic delivery of services however the implementation of the programs has differed dramatically in the two countries danish firms despite having had virtually no prior involvement in administering social programs have participated in far greater numbers than british employers who by contrast have long provided private employment based social benefits drawing from interviews with 107 randomly selected british and danish corporations this article seeks to explain why danish employers have participated at higher rates than their british counterparts subtle programmatic differences that reflect each country s welfare regime have had profound feedback effects on firms willingness to participate in the programs these findings have implications for regimes capacities both to correct for traps and to revise social protections to meet the needs of the new economy

the return of lockouts down under in comparative perspective globalization the state and employer militancy virtually unheard of since the great depression lockouts have reemerged strongly in australia and new zealand just as they have all but disappeared in germany the decline of lockouts in germany is convincingly attributed to the enhanced vulnerability of firms to stoppages in certain circumstances amid globalization but the small open economies of australia and new zealand are equally subject to these pressures using macro and micro level data this article illustrates that neoliberal legislative reforms and institutional change have reconfigured the risks costs and payoffs associated with lockouts amid globalization in doing so some flaws in the varieties of capitalism dual convergence literature are highlighted in particular the post hoc classification of the antipodes as liberal market economies bypasses the role of legislative reform in reconstituting employer interests and the differences in electoral party and state structures that impeded facilitated the rise of neoliberal reformers in

fair value disclosures by bank holding companies abstract this paper examines the value relevance of fair value data disclosed under sfas 107 by banks for 1992 and 1993 collectively the evidence suggests differences between fair and book values of financial instruments are associated with market to book ratios however fair value disclosures for financial instruments other than securities are value relevant only in limited settings in addition only in 1992 are fair value variables associated with market to book ratios after incorporating existing historical cost information further analysis suggests the weaker 1993 results are not necessarily due to increased measurement error in fair value numbers

labor union objectives and collective bargaining we consider a model oflabor union behavior in which workers make decisions about wages and employment by simple majority rule we show that under general conditions such a union has a well behaved objective function different from those previously postulated in the literature we then show that the union s majority preferences generally lack a von neumann morgenstern utility representation and thus cannot be inserted into traditional bargaining models we then develop and characterize the solutions to a new bargaining model that is consistent with the structure of union preferences several comparative statics results are presented

the effect of unions on wage inequality in the u s labor market this study uses current population survey micro data for 1973 74 and 1993 to evaluate the effect of changing union membership on trends in male and female wage inequality unionization rates of men fell between the two sample periods with bigger declines among lower skill groups these trends account for 15 20 of the rise in male wage inequality union membership rates of low wage women also declined while unionization increased among higher wage women on balance shifting unionization accounts for very little of the rise in female wage inequality economy wide trends in unionization mask a sharp divergence between the private sector where unionism was declining and the public sector where it was rising comparisons across sectors suggest that unionization substantially slowed the growth in wage inequality in the public sector

power and the ascendance of new economic policy ideas lessons from the 1980s crisis in israel recent explanations of transformations of macroeconomic policy under crisis conditions spotlight the intrinsic properties of ideas and the persuasiveness with which they are marketed bridging the divide between power and discourse approaches this article reveals the causal role played by the power resources of expert ideational entrepreneurs conditional on the political conjuncture in which they operate the authors exploit a fortuitous natural experiment from the early 1980s when the israeli economy spiraled into hyperinflation two similar proposals for economic stabilization and reform were offered by different teams of economists less than two years apart while the government rejected the dollarization plan its authorization of the stabilization plan inaugurated a new political economic regime this case in which similar programs were advocated by different ideational entrepreneurs in a largely stable institutional and economic context makes it possible to pinpoint why radically new ideas succeed or fail previously underutilized analytical tools are employed to conceptualize the power of idea carriers at both the individual and the group level

when do institutions bite historical institutionalism and the politics of institutional change historical institutionalist theories of endogenous change have enhanced our understanding of institutional development by providing a theoretical vocabulary for analyzing how institutions may be renegotiated over the long run by social and political actors in these theories however the causal impact of institutions themselves on political outcomes including their own change and reform is less developed a significant problem for an institutional research program this paper addresses this problem by proposing strategies that integrate historical institutionalism s insights into endogenous institutional change with a systematic analysis of the institutional conditions under which bottom up processes of gradual change are likely to be counteracted in particular the institutionalization of cultural categories and the allocation of power over the timing of reform within institutional and policy configurations are important variables for understanding how pre existing institutions may enable institutional incumbents to channel delay or prevent institutional change

politics institutions and welfare spending in industrialized democracies 1960 82 electoral turnout as well as left and center governments increase welfare effort that the welfare efforts of governments led by particular types of parties show significant differences and vary notably with the strength of oppositional and junior coalitional parties and that relatively neocorporatist centralized and traditionalistic polities are high on welfare effort overall our findings suggest that contrary to many claims both partisan and nonpartisan facets of democratic politics and political institutions shape contemporary social welfare effort

the politics of common knowledge ideas and institutional change in wage bargaining domestic economic institutions change through processes of conflict and bargaining why do the strongest groups in such conflicts ever change their minds about the acceptability of institutional arrangements they once opposed drawing on the cases of ireland in 1986 87 and italy in 1989 93 this article demonstrates how the process of common knowledge creation between employers and unions changed the course of negotiations over national wage bargaining institutions common knowledge creation happens when existing institutions are in crisis the institutional experimentation that follows such crises characterized by deep uncertainty places a premium on persuasive argument the ideas most likely to serve as the basis for newly common knowledge will have analytical and distributive appeal to both unions and employers and they must be ratified in public agreements which i call common knowledge events common knowledge events establish new social facts which can change the payoffs associated with different institutional outcomes this can lead even powerful actors to accept institutions they had previously opposed the author thanks marius busemeyer mary louise culpepper keith darden orfeo fioretos archon fung peter hall andrew martin cathie jo martin victoria murillo kathleen thelen and gunnar trumbull along with three anonymous reviewers and the editors of io for comments and conversations that improved this article ben ansell and vikram siddarth provided valuable research assistance financial support from the john f kennedy school of government and the weatherhead center for international affairs at harvard university is gratefully acknowledged any remaining errors are my own

social stratification and welfare regimes for the twenty first century revisiting the three worlds of welfare capitalism in the last decade the literature surrounding the political economy of welfare states in advanced industrial democracies has relied extensively on the welfare state typology developed by gosta esping andersen in his seminal book the three worlds of welfare capitalism since that time there has been much debate about whether and to what degree the features of welfare policies highlighted in this work have changed in the last twenty five years while scholars have used these data as a framework the substance of the framework itself the underlying indicators of benefit generosity and stratification has largely escaped criticism due to the absence of data that permit any yet such knowledge is essential to understand fully the welfare states of europe and other industrial countries in the twenty first century the authors have recently updated esping andersen s decommodification index this article examines the social stratification index reanalyzing and updating through the 1990s the indicators used by esping andersen as with earlier reexaminations of the index of decommodification this reanalysis produces considerably less empirical support for coherent welfare regimes moreover evidence of coherent regimes has become even less clear cut over the last quarter century

inequality social insurance and redistribution is the political support for welfare policy higher or lower in less egalitarian societies we answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner when voters have both redistributive and insurance motives for supporting welfare spending the effect of inequality depends on how benefits are targeted greater inequality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those without earnings with endogenous targeting support for benefits to those without earnings declines as inequality increases whereas support for aggregate spending is a v shaped function of inequality statistical analysis of welfare expenditures in advanced industrial societies provides support for key empirical implications of the model

time varying inter market linkage of international stock markets as a response to the growing concern on the interconnection of international stock markets this study uses the pena box model to capture time varying relationship of the returns of 13 stock indices during 1993 2002 the results indicate a dynamic relationship of world major stock markets over time which provide new but supplemental evidence on the conclusion derived from the conventional confirmatory factor analyses in literature

capitalist systems deindustrialization and the politics of public education recent years have seen a number of studies on the determinants of educational spending almost all of the existing work emphasizes the importance of left wing governments as a motor of expansion because such expansion allegedly ensures both redistribution and the facilitation of a supply side economy the existing literature thereby corroborates the power resource theory against this common wisdom the article presents an argument building on the varieties of capitalism approach it is argued that education is a poor instrument for redistribution because access is universal and high income groups have a tendency to use education even more than low income groups instead we argue that deindustrialization is the main driver of educational spending because deindustrialization constitutes one of the most salient threats to workers in modern societies as deindustrialization rises workers risk ending up with redundant skills especially in countries where the average skills specificity is high that is coord

the evolution of top incomes in an egalitarian society sweden 1903 2004 this study presents new homogenous series of top income shares in sweden over the period 1903 2004 we find that starting from levels of inequality approximately equal to those in other western countries at the time the income share of the swedish top decile drops sharply over the first eighty years of the twentieth century most of the decrease takes place before the expansion of the welfare state and by 1950 swedish top income shares were already lower than in other countries the fall is almost entirely due to a dramatic drop in the top percentile explained mostly by decreases in capital income while the lower half of the top decile consisting mainly of wage earners experiences virtually no change over this period in the past decades top income shares evolve very differently depending on whether capital gains are included or not when included sweden s experience resembles that in the u s and the u k with sharp increases in top incomes excluding capital gains sweden looks more like the continental european countries where top income shares have remained relatively constant a possible interpretation of our results is that sweden over the past 20 years has become a country where it is more important to make the right financial investments than to earn a lot to become rich

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

rational expectations econometric analysis of changes in regime an investigation of the term structure of interest rates abstract this paper is of interest both for its methodological contribution of new tools for analyzing rational expectations models and for its substantive conclusions concerning the term structure of interest rates during the monetary experiment of october 1979 the paper studies systems subject to changes in regime interpreted here as occasional discrete shifts in the parameters governing the time series behavior of exogenous economic variables the specification is shown to be quite tractable both theoretically and empirically the technique is used to analyze yields on three month treasury bills and ten year treasury bonds during 1962 to 1987 a constant parameter linear model for short term rates is shown to be inconsistent both with the univariate time series properties of short rates and with the observed bivariate relation between long and short rates under the expectations hypothesis of the term structure an alternative nonlinear model that admits the possibility of changes in regime affords a much better description of the univariate process for short rates moreover the cross equation restrictions implied by the expectations hypothesis of the term structure are consistent with the nonlinear specification indeed the residuals of the restricted relation have a standard error of only 0 8 basis points this is a third less than that of a completely unrestricted linear regression of long rates on short rates and compares with an unconditional standard deviation of long rates of 142 basis points i conclude that once the recognition by bond traders of changes in regime is taken into account the expectations hypothesis of the term structure of interest rates holds up fairly well for these data

virtual integration of financial markets a dynamic correlation analysis of the creation of the latin american integrated market this article investigates the role of virtual integration of financial markets on stock market return co movements in may of 2011 the chilean colombian and peruvian stock markets virtually integrated their stock exchanges and central securities depositories to form the latin american integrated market mila we utilize the dynamic conditional correlation model proposed by engle 2002 to identify a statistically significant positive correlation between these markets moreover we find strong evidence that the creation of the mila increased the levels of dynamic correlation between stock returns a higher correlation was also found during the dot com bubble and the 2007 financial crises our results imply a decline in gains from international diversification by holding portfolios consisting of diverse stocks of these countries

university challenges explaining institutional change in higher education higher education policy has been subject to considerable reform in oecd states over the past two decades some states have introduced tuition fees others have massively increased public funding for higher education and still others remain in stasis retaining the elitist model with which they began the postwar era this article develops the argument that higher education policy in the oecd is driven by a set of partisan choices within a trilemma between the level of enrollment the degree of subsidization and the overall public cost of higher education the author develops a formal model of the micromechanisms underlying movements within this trilemma noting the importance of partisan politics existing enrollment tax structure and access these propositions are tested statistically on a sample of twenty two oecd countries and through case histories of higher education reform in england sweden and germany

wage setting institutions and pay inequality in advanced industrial societies the distribution of pay differs significantly across countries and over time among advanced industrial societies in this paper institutional and political determinants of pay inequality are studied in sixteen countries from 1980 to 1992 the most important factor in explaining pay dispersion is the level of wage setting i e whether wages are set at the level of the individual the plant the industry or the entire private sector the impact of centralization is the same whether centralization occurs via collective bargaining or via government involvement in private sector wage setting the concentration of unions and the share of the labor force covered by collective bargaining agreements also matter after controlling for wage setting institutions other variables such as the governing coalition the size of government international openness and the supply of highly educated workers have little impact economic political and norm based explanations for the association of centralization with egalitarian outcomes are discussed

partisan politics and public finance changes in public spending in the industrialized democracies 1955 1989 this paper evaluates the role that partisan politics plays in altering public spending levels the analysis covers over three decades of data on the developments of the public sectors in 16 oecd countries the results of the analysis lend firm support to the partisan politics model of special note is the distinction between the electorate and the government ideological preferences and the dominant role that the former plays the results also suggest contrary to conventional wisdom that partisan political influences have not been eliminated with the tightening of linkages to the international economy

welfare capitalism and the social security act of 1935 a central concern of political theorists has been the relationship between the state and the economy or more specifically how political power gets translated into economic power recent debates have been shaped around critiques of the corporate liberal thesis which contends that class conscious capitalists manipulate the polity so that government comes to pursue policies favorable to capitalism alternative theories suggest that the state is capable of transcending the demands or interests of any particular social group or class the social security act of 1935 which represented the beginning of the welfare state in the united states was a conservative measure that tied social insurance benefits to labor force participation and left administration of its public assistance programs to the states in this paper the social security act is used as a case study to adjudicate between several competing theories of the state the analysis demonstrates that the state functions as a mediating body weighing the priorities of various interest groups with unequal access to power negotiating compromises between class factions and incorporating working class demands into legislation on capitalist terms a central concern of political theorists has been the relationship between the state and the economy or more specifically how economic power gets translated into political power recent debates have been shaped around critiques of the corporate liberal thesis which stresses the strategies of class conscious capitalists to manipulate the polity alternative theories suggest that the state is capable of transcending the demands or interests of any particular social group or class the core agenda of those espousing some variant of corporate liberalism has been to explain how major economic interests manipulated the polity in the twentieth century so that government came to pursue policies favorable to capitalism domhoff 1979 kolko 1963 o connor 1973 useem 1983 according to this perspective capitalists rationally pursued a series of policies designed to allow them control of the political process resulting in a synthesis of politics and economics for example kolko 1963 has argued that the regulatory reforms of the progressive era traditionally explained as a respose to muckraker s criticism were actually desired by large industry as a way not only of controlling

the impact of conservatism on management earnings forecasts abstract we investigate the empirical relation between a firm s accounting conservatism and management s issuance of quantitative earnings forecasts using three measures of conservatism from prior literature along with two aggregate measures we find a negative association between conservatism and the frequency specificity and timeliness of management forecasts the results are robust to estimating the regression in changes using firm fixed effects and using a two stage instrumental variables approach overall these results suggest that accounting conservatism acts as a substitute for management forecasts by decreasing information asymmetry in the market and reducing potential litigation through the timely reporting of bad news

biases and lags in book value and their effects on the ability of the book to market ratio to predict book return on equity in this paper we distinguish two sources of variation in the book to market ratio bias and lags in book value hereafter bias and lags with different implications for the book to market ratio s ability to predict future book return on equity specifically we hypothesize and find that the bias component of the book to market ratio has a more persistent cross sectional association with future book return on equity than does the lag component this investigation is motivated both by the central role of expectations of book return on equity in the discounted residual in come valuation model e g see feltham and ohlson 1995 and by prior empirical research that finds that the book to market ratio is correlated with future book return on equity e g see fama and french 1992 1995 penman 1992 and bernard 1994

unequal participation democracy s unresolved dilemma presidential address american political science association 1996 low voter turnout is a serious democratic problem for five reasons 1 it means unequal turnout that is systematically biased against less well to do citizens 2 unequal turnout spells unequal political influence 3 u s voter turnout is especially low but measured as percent of voting age population it is also relatively low in most other countries 4 turnout in midterm regional local and supranational elections less salient but by no means unimportant elections tends to be especially poor 5 turnout appears to be declining everywhere the problem of inequality can be solved by institutional mechanisms that maximize turnout one option is the combination of voter friendly registration rules proportional representation infrequent elections weekend voting and holding less salient elections concurrently with the most important national elections the other option which can maximize turnout by itself is compulsory voting its advantages far outweigh the normative and practical objections to it

revisiting the role of labor worker solidarity employer opposition and the development of old age pensions in the netherlands and the united kingdom the purpose of this article is to emphasize the importance of the organizational blueprint of labor unions for welfare state outcomes as a result of the tendency of scholars to view labor as a homogenous and disadvantaged class the existing literature has paid little attention to this many scholars have simply taken labor union support for welfare state development for granted and consequently have focused only on labor union strength this article argues rather that labor union support for welfare state development cannot be taken for granted it shows that labor unions support or oppose welfare state development depending on their organizational blueprint this new approach highlights the importance of the labor union movement s organizational structure as opposed to its organizational strength for welfare state outcomes the article also explores how the organizational structure of the labor union movement shapes the stance of employer interest groups toward welfare state development the empirical findings are based on a comparison of british and dutch postwar old age pension development

the social construction of an imperative why welfare reform happened in denmark and the netherlands but not in germany this article seeks to explain why denmark and the netherlands made dramatic progress reforming their welfare systems in the 1990s and why germany had a relatively slow start some possible explanations found to be incomplete are institutional differences in welfare programs the uniqueness of circumstances for example german unification and the balance of political power in governing institutions an important part of the puzzle is an increasing perception of the need to reform that was more widespread in denmark and the netherlands the social construction of an imperative to reform in these countries generated a political consensus that was elusive in germany but that may be developing under gerhard schroder s government

relative valuation roles of equity book value and net income as a function of financial health abstract this study tests predictions that pricing multiples on and incremental explanatory power of equity book value net income increase decrease as financial health decreases tests using a sample of 396 bankrupt firms and tests using a larger pooled sample both yield inferences consistent with predictions findings are robust to inclusion of controls for industry size return on equity and volatility of equity returns equity book value and net income multiples and incremental explanatory power vary predictably across three illustrative industries selected based on the likely extent of unrecognized intangible assets

the state and coordinated capitalism contributions of the public sector to social solidarity in postindustrial societies this article investigates the politics of change in coordinated market econo mies and explores why some countries well known for their highly cooperative arrangements manage to sustain coordination when adjusting to economic transformation while others fail the authors argue that the broad category of coordinated market economies subsumes different types of cooperative engagement macrocorporatist forms of coordination are characterized by national level institutions for fostering cooperation and feature a strong role for the state while forms of coordination associated with enterprise cooperation more typically occur at the level of sector or regional institutions and are often privately controlled although these diverse forms of coordination once appeared quite similar and functioned as structural equivalents they now have radically different capacities for self adjustment the role of the state is at the heart of the divergence among european coordinated countries a large public sector affects the political dynamics behind collective outcomes through its impact both on the state s construction of its own policy interests and on private actors goals although a large public sector has typically been written off as an inevitable drag on the economy it can provide state actors with a crucial political tool for shoring up coordination in a postindustrial economy the authors use the cases of denmark and germany to illustrate how uncontroversially coordinated market economies have evolved along two sharply divergent paths in the past two decades and to reflect on broader questions of stability and change in coordinated market economies the two countries diverge most acutely with respect to the balance of power between state and society indeed the danish state far from being a constraint on adjustment a central truism in neoliberal thought plays the role of facilitator in economic adjustment policy change and continued coordination

earnings inequality and welfare spending a disaggregated analysis the welfare state is generally viewed as either providing redistribution from rich to poor or as providing publicly financed insurance both views are incomplete welfare policies provide both insurance and redistribution in varying amounts depending on the design of the policy the authors explore the political consequences of the mix of redistribution and insurance in the context of studying the impact of income inequality on expenditures in different categories of welfare spending in advanced industrial societies from 1980 to 1995 they find that spending on pensions health care family benefits poverty alleviation and housing subsidies is largely uncorrelated with income inequality but that spending on income replacement programs such as unemployment insurance sickness pay occupational illness and disability are significantly higher in countries with more egalitarian income distributions they show that this pattern is exactly what a theory of political support for redistributive social insurance programs would predict

the transformation of the swedish model economic ideas distributional conflict and institutional change this article examines the transformation of the swedish model of economic regulation from an ideational perspective while the majority of arguments about the decline of the swedish model have focused on the role of structural factors this article looks to illuminate the ideational factors that made possible both the emergence and the transformation of the swedish model the article details how during the 1930s and 1940s economic ideas provided the swedish state and its trade union allies with the means to construct the institutions of the swedish model by the 1970s however swedish business suffered diminishing returns to continued participation within these institutions and responded to labor s challenges by adopting a two pronged strategy of withdrawal from and ideological contestation of labor s supporting institutions the politics of ideas was key in this regard during the 1980s swedish business marshaled alternative economic ideas to contest and thus delegitimate existing institutions and the patterns of distribution they made possible swedish business thus began the process of overturning the swedish model long before capital mobility or domestic inflation was ever a problem by highlighting these factors the article offers an explanation of the transformation of the swedish model that stresses the centrality of ideational contestation for understanding institutional change in general

responses of international stock markets to oil price surges a regime switching perspective we propose an enhanced regime switching model to investigate the relationships between oil price surges and stock market cycles in five oil dependent countries our model accounts for the joint effects of the west texas intermediate wti and brent oil markets and simultaneously captures asymmetry volatility persistence and regime shifts contained in the underlying financial data we find that stock market returns strongly exhibit a regime switching behaviour but they react differently to the increases in the price of oil more precisely the conditional volatility of studied stock markets during the bear market phases is found to be less affected by oil price surges than during the bull market phases whether the effects of oil shocks are positive or negative depends greatly on the degree of reliance on imported oil the share of the cost of oil in the national income and the degree of improvement in energy efficiency of a given country finally the relatively opposite effects of the wti and brent oil

labor markets production strategies and wage bargaining institutions the swedish employer offensive in comparative perspective transformed patterns of labor market governance occupy a central place in the study of contemporary west european political economies here detailed analysis of the dramatic decentralization of wa