Left partisan politics and pension privatisation at the crossroads of political legacy and contemporary politics (1980–2017)

Abstract

Pension reforms undertaken by affluent OECD countries in recent decades have resulted in substantial changes in the balance of public and private pension provision, characterised as a growing privatisation of old-age incomes. However, research on the political determinants of this trend remains limited. The purpose of this paper is to analyse the political determinants of pension privatisation, and to bring partisan politics back into the theoretical framework of pension reforms. The focus is on left government strength, and a distinction is made between left government historical legacy and contemporary left government strength. Time-series cross-sectional regressions of pension privatisation on left government strength are performed, analysing 17 OECD countries during the period 1980–2017. The results show that partisan politics matter for pension privatisation, despite structural constraints imposed by demographic and economic factors. Left government historical legacy is associated with less privatisation compared to right and/or centre government historical legacy. Left government legacy also shapes the role of contemporary politics, as contemporary left parties in government tend to privatise less in the context of historically strong left parties in government.