A Dynamic Theory of Gradual Institutional Changes: Evidence from Welfare State Reforms in Israel

Since the publication of Thelen and Streeck's (2005) seminal volume, the crucial role of agents and politics in advancing gradual institutional changes and reshaping the political-economic regimes of advanced economies has been widely acknowledged. Nevertheless, so far the relation between agents' change strategies and institutions has received a static framing, in the sense that agents' change strategies are defined in accordance with the political and institutional context within which they operate at one specific point in time. For example, when internal barriers are high but external ones are low, agents are likely to pursue layering strategy (Hacker 2005).  

This paper develops and applies a dynamic analytical framework of gradual institutional changes which considers how agents may pursue gradual change strategies to transform the political and institutional context within which they operate in an evolving way. Consequently, applying one strategy of gradual change at t₀ may open additional opportunities for change in t₁ and enhance the chances of further institutional transformation in t₂. For example, institutional layering, by adding new elements into the prevailing institutional context, eases the way towards conversion of previously "untouched" institutional elements.  Similarly, utilizing institutional drift strategy may serve as a catalyst of a crisis that will open the possibility for layering and/or displacement.

We utilize various case studies of welfare state transformation in Israel, which took place in recent decades, to demonstrate the applicability of such a dynamic model of gradual institutional changes.