Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/303348 
Authors: 
Year of Publication: 
2013
Series/Report no.: 
LEQS Paper No. 65
Publisher: 
London School of Economics and Political Science (LSE), European Institute, London
Abstract: 
The German social democratic party initiated in 2003 the greatest overhaul of labour market legislation in decades, severely cutting unemployment benefits and slashing employment protection legislation. How can we explain this radical policy shift? This paper will present a counter-intuitive answer, arguing that the SPD implemented the reforms because of electoral interests. The rationale is two-fold and relates to changes in labour market policy supply and policy demand. First, the German social democrats strategically adjusted their labour market policy supply, seeking to maximise their office pay-offs by appealing to the median voter in a competitive political space. Second, the shift in policy-supply is also a reaction to changes in labour market policy-demand, with crucial segments of the electorate turning more favourably to welfare state retrenchment. This shift disproportionally benefited the conservative CDU and liberal FDP and forced the SPD to reposition itself in the party landscape.
Subjects: 
labour markets
partisanship
party competition
JEL: 
J48
P16
Document Type: 
Working Paper

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