How partisan politics influence government policies in response to ageing populations

Kweon & Suzuki
Yesola Kweon & Kohei Suzuki

Unlike other social policies which disproportionately target economically disadvantaged individuals, old-age programs, like pensions, mitigate life-course risks that are relevant to everyone. Whether someone is lower- or upper-class, young or old, everyone ages and could experience unexpected costs and reduced income. For this reason, all parties across the ideological spectrum have a political incentive to support these programs. Nevertheless, in our new article in Policy & Politics, ‘How partisan politics influence government policies in response to ageing populations,’ we emphasize that partisan politics still matter in determining the modes of policy provision in response to an ageing population.

Firstly, government partisanship can influence which pension systems are more valued in providing pension support. So governments choose between public versus private pension expenditure that is in line with their partisan ideology. Conservative governing parties are more likely to prefer resource distribution through indirect subsidisation and regulation of private-sector social services and benefits, instead of directly providing welfare benefits through a public system. By contrast, left-wing parties tend to favour a role for the state in providing social protection to citizens and encouraging economic redistribution.

Incumbent partisanship also influences pension coverage and replacement rates. In the context of rapid population ageing, left- and right-wing parties are concerned with different aspects of its economic effects, resulting in different policy outcomes. As right-wing parties are mainly concerned with economic productivity and efficiency, they have an incentive to coax a broader range of individuals into the labour force by providing a minimal level of social protection. Here, expansion of pension coverage works as a policy instrument that growth-oriented conservative parties use to boost the economy by resolving labour shortages. By contrast, population ageing has also widened economic inequality as poverty among economically vulnerable groups has grown. As a result, left-wing parties, which are concerned with redistribution, are likely to concentrate limited resources to those in economic need.

We test our arguments using analyses of government policy data in OECD countries. Our findings show that left-leaning governing parties are more likely than right-leaning parties to rely on public benefits in the presence of a high elderly population, while conservative parties rely more on private systems. The large partisan difference is also found in public pension replacement and coverage rates. In the case of a high senior population, pension replacement rates are higher in left-leaning governments, while coverage rates are higher in right-leaning governments.

In contrast to the conventional understanding that partisanship has less impact on life course-related policy decisions, this study demonstrates that partisanship influences governments’ choices of policy measures: the size of public versus private pension expenditures, and coverage versus replacement rates. When governments are under pressure from increasing policy needs and limited fiscal resources caused by demographic changes, they not only adjust the amount of welfare spending, but also the “modes” of public spending within existing partisan constraints.

Understanding the latter is particularly important because, while both public and private social services provide minimal support for the old, they have vastly different implications for redistribution. Benefit levels produced by market-based pension systems, for instance, tend to be tied to occupational status and one’s contributions. Similarly, coverage rates determine the breadth of redistribution (i.e., the number of people protected by a welfare system), but replacement rates influence the depth of redistribution (i.e., the degree to which social welfare substitutes income loss). Focusing only on the size of welfare spending neglects these important redistributive implications of the policy.

You can read the original research in Policy & Politics

Yesola Kweon and Kohei Suzuki (2022) How partisan politics influence government policies in response to ageing populations Policy and Politics DOI:

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The views and opinions expressed on this blog site are solely those of the original blog post authors and other contributors. These views and opinions do not necessarily represent those of Policy & Politics, the Policy Press and/or any/all contributors to this site.

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