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Globalization and social justice in OECD countries

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Abstract

Social justice is a topic of importance to social scientists and also political decision makers. We examine the relationship between globalization and social justice as measured by a new indicator for 31 OECD countries. The results show that countries that experienced rapid globalization enjoy social justice. When the KOF index of globalization increases by one standard deviation, the social justice indicator increases by about 0.4 points (on a scale from 1 to 10). The policy implication is that permitting a national economy to become globally integrated is consistent with and promotes social justice.

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Notes

  1. Formally, Rawls’ view of social justice as focused on the well-being of the worst-off in a society requires behavioral assumptions because a rational expected-utility maximizing individual would choose a Bentham social welfare function behind a veil of ignorance. See Hillman (2009, chapter 6).

  2. Mezzetti (1987) portrays the nexus between Pareto efficiency and the theories of Rawls and Nozick. For an experimental investigation of distributive justice see Traub et al. (2005). On equality of opportunity see Hansson (2004), Roemer (2002), Roemer et al. (2003), and Sugden (2004).

  3. The article in the German newspaper Frankfurter Allgemeine Zeitung (3 January 2011): “Lücken in der sozialen Gerechtigkeit” elaborated on the social justice indicator in detail.

  4. Interview with Die Welt on 30 September 2006.

  5. Blog entry on The conscience of a liberal (New York Times) on 13 March 2006.

  6. See Jones (2010) for an overview of “key thinkers” of globalization. On “dark sides” of globalization, focusing on non-economic issues in developing countries, see Heine and Thakur (2011). On inequality and social justice see, for example, Arrow et al. (2000) and Gandolfo and Marzano (1999).

  7. The share of low-skilled workers and thus the labors’ bargaining power may also influence how globalization affects welfare spending, in particular in developing countries (Rudra 2002).

  8. On the globalization-welfare state nexus see Schulze and Ursprung (1999) and Ursprung (2008). On how globalization has influenced capital tax rates see Dreher (2006a).

  9. On how to measure inequality see, for example, Milanovic (2005). See Acosta and Montes-Rojas (2008) for how trade reforms have influenced inequality in Mexico and Argentina, and Kumar and Mishra (2008) for how trade liberalization has influenced inequality in India. Das (2005) portrays the nexus between globalization and inequality theoretically. For further discussions see, for example, Richardson (1995) and Wood (1995).

  10. Globalization also increased protection in the agricultural sector (Garmann 2014).

  11. See Martens et al. (2014) on new directions in measuring globalization.

  12. The KOF index is not available for the Czech Republic and the Slovak Republic until 1992. We thus average the KOF index over 15 rather than 17 years for the Czech Republic and the Slovak Republic.

  13. The countries with lacking data are Chile, the Czech Republic, Hungary, Mexico, Poland, the Slovak Republic, South Korea, and Turkey. The ideology index is not available for Portugal until 1975 and Spain until 1976. We thus average the ideology index over 32 and 31 rather than 33 years for Portugal and Spain.

  14. Raphael (2001) distinguishes between concepts of distributive justice that focus on merit and concepts that focus on equality. “As in the days of Plato and Aristotle, right-wing political parties tend to stress the merit conception, while left-wing political parties stress the equality conception” (Raphael 2001: 6). Left-wing governments appeal more to their labor base; right-wing governments appeal more to capital owners (Hibbs 1977; Alesina 1987). Left-wing governments have expanded the welfare state (e.g., Hicks and Swank 1984; Bradley et al. 2003). Under left-wing governments, inequality has reduced growth rates; under right-wing governments, inequality has increased growth rates (Bjørnskov 2008). Growth rates have been higher in right-wing societies (Bjørnskov 2005). Government ideology has not explained life satisfaction (Bjørnskov et al. 2008).

  15. Coding governments in OECD countries on a left–right scale is not controversial. Experts have used several indicators for government ideology in OECD countries to investigate the influence on economic policy-making and stressed that results are not sensitive to the choice of the government ideology indicator (e.g., Pickering and Rockey 2011).

  16. Scandinavian countries may enjoy higher levels of social justice as social trust has been shown to induce larger welfare states (Bergh and Bjørnskov 2011). We include social trust for robustness tests (see Sect. 4.2).

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Acknowledgments

We received helpful comments from Niclas Berggren, Andreas Bergh, Christian Bjørnskov, Arye L. Hillman, Heinrich W. Ursprung, and an anonymous referee. Miriam Breckner, David Happersberger, Danny Kurban, and Felix-Sebastian Weber provided excellent research assistance.

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Authors and Affiliations

  1. Ifo Center for Public Finance and Political Economy, Ifo Institute, Poschingerstr. 5, 81679, Munich, Germany

    Björn Kauder & Niklas Potrafke

  2. University of Munich, Munich, Germany

    Niklas Potrafke

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  1. Björn Kauder
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Correspondence to Björn Kauder.

Appendix

Appendix

See Tables 4, 5 and 6.

Table 4 Social justice sub-indicators consist of quantitative measures and expert opinions
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Table 5 Social justice indicators are highest in Northern Europe
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Table 6 Descriptive statistics
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Kauder, B., Potrafke, N. Globalization and social justice in OECD countries. Rev World Econ 151, 353–376 (2015). https://doi.org/10.1007/s10290-015-0213-1

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