Globalisaition, Institutions and the Welfare State (GIWeS)

Globalisation and economic internationalisation over the last two decades have led to dramatic challenges to European economies and Welfare States. European countries have reacted to this new environment, and many social institutions are being reconsidered. Many observers have argued that Europes welfare institutions hinder growth, rather than promote it, and are in need of urgent reform. These observations raise the fundamental question of whether the European Welfare State and its different incarnations (the Scandinavian, the German or the British model) will survive this transformation, and in which form. Will one common European model of the Welfare State emerge and if so what will be its features? Or, will the varying ability of European economies to adjust to global change lead to a withered Welfare State in some countries and to a thriving one in others? Whether, and to what extent the political process will be able to respond to the demands for institutional change, and the degree to which the voters will be willing to authorise such changes, are the key questions facing each EU member state. Under Theme 1 (The Interplay between Trade, Technology and the Welfare State) we ask how European economies and Welfare States have responded to global trade opportunities and global competition. Under Theme 2 (National Welfare States in an Integrated European Labour Market) we examine the impact the exposure of national economies and labour markets to a global economy has on the young and the low skilled, and the interplay between national skill requirements, intra-European migration, and the challenges to national Welfare States. Under Theme 3 (Political Support for Reforming the European Welfare States) we link the analyses carried out under Themes 1 and 2 using a political economy approach that focuses on institutional changes and the political support for them.

In the first part of the project, we worked on the impact of globalization on institutions. In a first paper, we analyzed the effects of increased immigration of foreign workers on the unionization rates of native workers in Austrian firms. This research is important because it shows that globalization can have a direct influence on institutions and the organization of the welfare state. Our results indicate a negative effect of the presence of foreign workers on native workers` unionisation rates. The negative effect is the result of unionised native workers leaving firms with a larger share of migrants, but not by native workers leaving unions or firms` reduced hiring of native union members. The second part of the project looks at the effect of globalization and institutions on social issues, like living standards, disability and health. We study educational mismatch across Europe and report convergence across Europe, which has been interrupted by the global economic crises. In an innovative comparative study of the cost of disability for households in 31 European countries we extend and compare national estimates of disability costs from a broader perspective than previous research. Finally, we extend the analysis to the health sector showing that abortion reform triggered a reduction in unplanned births as well as an increase in the average quality of births in terms of more intensive prenatal control care and a lower probability of births among single mothers. Furthermore, we document a positive selection process of births because of the reform, as adequate prenatal control care and Apgar scores rose among the affected demographic group.