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Abstract

In this article, we shed new light on the question of the
degree to which welfare retrenchment has taken place.
Using disaggregated data in four spending categories over
almost three decades, we show that most countries still
spend more today than in 1980, but less than at the peak.
While absolute retrenchment below the 1980 level is rare,
relative retrenchment is very frequent. At the same time,
the deepest cuts have taken place in those areas that most
reduce inequality. We document a shift in spending from
the working-age population to pensions, on one hand, and
services on the other. In many instances, welfare state
retrenchment has been most pronounced in the most
generous welfare states of Scandinavia and continental
Europe. Taken together, our findings show that social
spending has not been immune to retrenchment, as “New
Politics” authors have suggested. With hindsight, the
1990s can be identified as a turning point when welfare state expansion came to an end, ushering in a phase of retrenchment.