Leveraging Ideational Legacies: Partisan Labor Market Policies in Crisis-Ridden Europe

This paper probes how governments in Europe have managed the labor market fallout following the Great Recession. We explain national patterns of labor market adjustment by highlighting the influence of nationally dominant ideational legacies on producing policy responses that are characterized by both path-dependent institutional reproduction and bounded innovation. Ideational legacies have had the dual effect of 1) constraining governments’ choices and 2) providing policymakers with an important political tool to realize their own partisan goals. On the one hand, the inherited normative ideas restricted labor market responses to a set of options that were considered appropriate in the eyes of the public and the broader political establishment. But on the other hand, as long as governments pursued policies that could credibly be presented as adapting institutions so as to secure overall continuity, governments enjoyed “normative cover” to set policy on track for institutional changes. By specifying the causal pathways through which ideas simultaneously create path dependence and enable path departure, we advance a better understanding of the role that ideas and discourses play in producing institutional change and continuity. The paper develops the argument with reference to Denmark, Germany and the United Kingdom.