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AbstractThe economic decline of Italy between the mid-1990s and the outset of the financial crisis is a critical case in European political economy because its model of capitalism was deeply reformed at the time when its decline commenced. This paper argues that the Italian economic stagnation cannot be attributed to the lack of market-friendly reforms in a globalized economic context, as argued by previous literature. Instead, Italian economic decline is a consequence of institutional change which on the one hand has destroyed previous institutional complementarities, and on the other hand has led to an incoherent, or 'hybrid,' capitalist setting. Under the lenses of the Varieties of Capitalism approach, this paper reviews the main reforms in the fields of corporate governance and finance as well as in the labor market. It shows that such reforms established new institutions alternatively apt to support both strategic coordination and market coordination, resulting in institutional incoherence, and mixed incentives. In the short-run, incoherent reforms have reduced the availability of capital to SMEs; in the longer-run, they failed to give actors incentives to pursue innovation. This paper contributes theories of economic growth/decline focused on the supply-side of the economy and it is compatible with other – non-rival – explanations focused on the demand-side.

This article presents fresh empirical data showing that policy alignment between center-left governments and trade unions was a sustained feature of European politics between 1974 and 2005. this contradicts expectations of a wide delinkage between the electoral left and labor as a consequence of globalization, deindustrialization, and unionization decline. However, structural economic change has altered the policy field so that sustained policy alignment can no longer be explained by existing theoretical frameworks.Based on a theoretical argument and a multivariate empirical test, the article contends that policy alignment is likelier to occur if labor plays an important role in economic management at the microlevel and the industry level and if unions are politically cohesive agents thanks to powerful confederation leadership supported by democratic decision-making practices. in making its case, the article bridges the literatures on comparative capitalism and party politics, in order to account for change and continuity in policy-making processes.

This article presents fresh empirical data showing that policy alignment between center-left governments and trade unions was a sustained feature of European politics between 1974 and 2005. This contradicts expectations of a wide delinkage between the electoral left and labor as a consequence of globalization, deindustrialization, and unionization decline. However, structural economic change has altered the policy field so that sustained policy alignment can no longer be explained by existing theoretical frameworks. Based on a theoretical argument and a multivariate empirical test, the article contends that policy alignment is likelier to occur if labor plays an important role in economic management at the microlevel and the industry level and if unions are politically cohesive agents thanks to powerful confederation leadership supported by democratic decision-making practices. In making its case, the article bridges the literatures on comparative capitalism and party politics, in order to account for change and continuity in policy-making processes. (World Politics / SWP)

AbstractWhy have labour market reforms varied so much across European countries in the 30 years preceding the economic crisis? We argue that the degree of liberalization over time in each country depends on the interaction between governments' partisan leaning, the strength of trade unions and the economic problem‐load pushing governments to adopt distinct labour market reform strategies. Building on existing literature, we interpret 'dualizing' labour market reforms as weaker forms of liberalization and test our argument on the cross‐national variation in over 200 labour market reforms carried out in 14 western European countries between 1985 and 2007. Our empirical results show that governments are less likely to liberalize if they face a strong union movement and the economic problem‐load is low. However, even in countries with strong unions, opposition may not always manage to block change. First, as unemployment becomes more severe, unions' ability to reduce the likelihood of liberalization strongly decreases. Second, trade unions often do not manage to prevent liberalization advanced by social democratic governments. Third, governments can devise three (non‐rival) strategies to deflect opposition: (1) they can re‐regulate parts of the labour market to protect certain workers from liberalization; (2) generous unemployment benefits can cushion the costs of liberalization, thereby increasing its likelihood; and (3) they can carry out two‐tier reforms to insulate insider (unionized) workers employed in permanent contracts, which limits union opposition. By identifying the complex interactions between variables that explain variation in labour market liberalization across European countries, this article contributes to our understanding of the evolution of European political economy.

This article contributes to the political economic literature regarding the effects of industrial relations institutions on national economic outcomes. Based on an econometric analysis of the determinants of wage moderation in sixteen industrialized countries between 1974 and 2000, it argues that the organizational characteristics of trade unions have a significant impact on wage dynamics. Controlling for a number of institutional and economic factors, the countries in which trade union confederations directly involve workers in the process of collective bargaining ratification have on average lower wage growth relative to productivity than others. The authors also find that collective bargaining coordination and contract ratification magnify each other's wage-dampening effect. Through case studies of Ireland and Italy, the article examines the causal mechanisms underlying the uncovered statistical regularities and concludes that, particularly at a time in which classic political exchange is waning, worker involvement in contract ratification allows confederation leaders to resolve conflicting claims inside their organizations at lower wage levels than are achieved by a less participatory governance process.