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>What's left of the left? Partisanship and the political economy of labour market reform: why has the social democratic party in Germany liberalised labour markets?
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What's left of the left? Partisanship and the political economy of labour market reform: why has the social democratic party in Germany liberalised labour markets?
The German social democratic party initiated in 2003 the greatest overhaul of labour marketudlegislation in decades, severely cutting unemployment benefits and slashing employmentudprotection legislation. How can we explain this radical policy shift? This paper will present audcounter-intuitive answer, arguing that the SPD implemented the reforms because of electoraludinterests. The rationale is two-fold and relates to changes in labour market policy supply andudpolicy demand. First, the German social democrats strategically adjusted their labour marketudpolicy supply, seeking to maximise their office pay-offs by appealing to the median voter in audcompetitive political space. Second, the shift in policy-supply is also a reaction to changes inudlabour market policy-demand, with crucial segments of the electorate turning moreudfavourably to welfare state retrenchment. This shift disproportionally benefited theudconservative CDU and liberal FDP and forced the SPD to reposition itself in the partyudlandscape.
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