From Benefits and Beneficiaries: The Historical Origins of Old-Age Pensions From a Political Regime Perspective

• DOI: 10.1177/0010414021989763
• Published date: 01 July 2021
• Date: 01 July 2021
• Author: Aline Grünewald
• Subject Matter: Articles

https://doi.org/10.1177/0010414021989763

Comparative Political Studies

2021, Vol. 54(8) 1424 –1458

© The Author(s) 2021

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DOI: 10.1177/0010414021989763

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Article

From Benefits and

Beneficiaries: The

Historical Origins of

Old-Age Pensions

From a Political Regime

Perspective

Aline Grünewald1

Abstract

Global studies on the historical origins of old-age pensions from a political regime

perspective are quite rare. Based on the novel PENLEG dataset this article shows

that democratic and nondemocratic regimes had different policy priorities

when designing old-age pensions for the first time. Whereas democracies had

significantly higher legal pension coverage rates than nondemocratic regimes,

the reverse pattern can be found for pension replacement rates. The study

also shows that temporal effects and colonial legacy mattered. Longstanding

democracies introduced much higher legal pension coverage rates than

countries that had recently democratized. Additionally, the French colonial

legacy spurred high legal pension coverage rates in African autocracies. These

findings underline the importance of taking the multidimensionality of welfare

programs into account when analyzing political regime differences. Moreover,

due attention must be paid to the historical context when theorizing about

welfare policies from a political regime perspective.

Keywords

old-age pensions, political regime type, PENLEG dataset, global and historical

perspective

1University of Bremen, SOCIUM, Bremen, Germany

Corresponding Author:

Aline Grünewald, University of Bremen, SOCIUM, Research Center on Inequality and Social

Policy, Mary-Somerville-Str. 5, Bremen 28359, Germany.

Email: aline.gruenewald@uni-bremen.de

989763CPSXXX10.1177/0010414021989763Comparative Political StudiesGrünewald

research-article2021

Grünewald 1425

Introduction

Since the Declaration of Human Rights in 1948, access to social security has

become a fundamental right. Even though old-age pensions are the most

widespread social security programs around the world (Schmitt et al., 2015,

p. 506), half of today’s world population still does not benefit from them

(ILO, 2014, p. 11). Moreover, benefit generosity levels vary tremendously.

Whereas Turkish pension replacement rates are even higher than current

wages (OECD, 2017, p. 106), pensioners in South Africa can barely cover

their most urgent needs (OECD, 2011, p. 125).

While the majority of studies have either focused on the effects of demo-

graphic changes (see e.g., Anderson & Lynch, 2007; Barr & Diamond, 2009;

Bonoli & Shinkawa, 2006) or International Organizations (see e.g., Ervik,

2005; Orenstein, 2005; Queisser, 2000) to explain different pension trajecto-

ries around the world, only scant attention has been paid to the explanatory

power of the political regime type. Previous studies on the welfare-regime

nexus have mainly answered the question whether democratic or nondemo-

cratic regimes pioneered the implementation of old-age pension programs

(Kangas, 2012; Knutsen & Rasmussen, 2018; Mares & Carnes, 2009; Usui,

1994) or specific old-age pension designs (Böger & Leisering, 2018; Cutler

& Johnson, 2004; Dodlova et al., 2016; Rudolph, 2016). Because of data

limitations, research on pension generosity levels from a political regime per-

spective is completely missing, while studies on pension coverage rates are

quite rare (Knutsen & Rasmussen, 2018; Schmitt, 2019). The existing stud-

ies, thus far, have only focused on recent pension trajectories (Schmitt, 2019)

or the development of legal pension coverage rates over time (Knutsen &

Rasmussen, 2018), disregarding the historical roots of old-age pension pro-

grams. As the implementation of a specific welfare design mostly “induces

further movement in the same direction” (Pierson, 2000, p. 252) or at least

shapes the leeway for future reforms (Hicks et al., 1995, p. 331), focusing on

the emergence of old-age protection schemes serves as a useful starting point

for analyzing political regime differences. However, as old-age pension pro-

grams are multidimensional, policy makers are often confronted with trade-

offs when designing welfare programs for the first time (Huang, 2014, pp.

33–34). By putting legal pension coverage rates and benefit generosity levels

in relation to each other, this article answers the question whether democratic

and nondemocratic regimes had different priorities with regard to these pen-

sion dimensions.

The article makes three major contributions to the existing literature. First,

it uses data from a novel dataset on the historical origins of the first old-age

pension schemes around the world, entitled PENLEG (Pension Legislation

1426 Comparative Political Studies 54(8)

around the World, 1880–2010) (Grünewald, 2020a). In contrast to existing

projects (Mares, 2005; Rasmussen, 2016), the PENLEG dataset offers a mul-

tidimensional legal pension coverage indicator, which can be disaggregated

to identify different covered groups. Moreover, it introduces the first indica-

tor on pension generosity levels for global and historical studies. Second,

the article contributes to the existing literature on welfare policies from a

political regime perspective in a theoretical way. By highlighting the multi-

dimensionality of pension programs, pension coverage rates and pension

replacement rates are analyzed in relation to each other. It is expected that

democratic and nondemo cratic regimes have opposite priorities with regard

to these pension dimensions. As democracies have bigger winning coalitions

than nondemocratic regimes (Bueno de Mesquita et al., 1999), they should

cover significantly more people. The reverse scenario, however, should hold

true for pension replacement rates. Given the expectedly higher pension

coverage rates of democratic regimes, offering high benefits to a broader

range of people via non-contributory financed pension programs would be

very costly so that modest benefits should be the result. Even in democracies

with contributory financed pension programs, such as social insurance

schemes, high pension replacement rates are not easily realized. When defin-

ing social contribution rates and pension eligibility criteria, such as retire-

ment ages or the number of required contribution months, democracies must

pay due attention to the preferences, social characteristics and contributory

capacities of a broader and more heterogeneous group of contributors. This

can be expected to create a dampening effect on pension generosity levels so

that pension benefits should be rather modest.

By contrast, nondemocratic regimes theoretically need to cover only those

segments that are essential for regime survival so that predominantly the eco-

nomically most powerful groups, such as industrial and commercial workers,

should be covered. Moreover, given the smaller number and variety of pro-

tected occupational groups, the risk pool is more predictable and homoge-

neous. In correspondence with the stronger economic power of the protected

groups, it should be easier to collect more contributions to realize higher

benefits. As a consequence, pension replacement rates should be higher than

in democratic regimes.

Empirical analyses of these new data find strong evidence for the stated

hypotheses. A closer look at the underlying mechanisms further reveals that

longstanding democracies covered significantly more people than countries

that had recently democratized. Moreover, the French colonial legacy led to

particularly high legal pension coverage rates among postcolonial autocra-

cies. These findings suggest that due attention must be paid to the temporal

and historical context when analyzing political regime differences. Last but