Distributional choices lie at the very heart of most political decisions nowadays. This is especially the case for social policy. The enormous expansion of the welfare state in the Golden Age of the postwar years has been an extraordinary feature of advanced industrial democracies. Ever since the economic crisis in the 1970s, however, a further expansion of the welfare state is extremely difficult to achieve. Due to limited financial resources and increasing social demands, governments increasingly implement reforms that improve only the situation of certain social groups at the cost of others. Welfare state reforms should therefore no longer be analyzed merely in terms of a crude distinction between expansion and retrenchment but rather in terms of their distributional design. To find out who gets what in times of austerity, we need to distinguish distributional effects for different social groups.
Using aggregate spending data to answer these questions is of little help. First, aggregate spending data can tell us little about distributional questions. Second, spending outcomes follow reforms with a considerable time lag that makes it difficult to link spending data to parties in government. Usually, governments reap the benefits of reforms enacted by their predecessors.
In this paper, I therefore propose to assess distributional effects on labor market insiders and outsiders based on coding the policy content of labor market reforms in Continental and Southern Europe from 1990 to 2015. The goal is not only to identify descriptive trends, but also to attribute certain policy outputs to specific parties in government. This allows me to assess the effect of different parties in government on the distributional profile of labor market reforms in the last 25 years in Continental and Southern Europe.
