"Testing the Europeanization Hypothesis: Macroeconomic Adjustment Pressures and the Southern European Welfare Model"

The literature on Europeanization investigates the ways in which processes of European integration and EU-level policy-making affect domestic institutional structures. The extent to, and the ways through which member states respond to adaptational pressures stemming from the EU will depend on the ‘goodness of fit’ between the EU policy regime and member states’ policies. This paper seeks to test the empirical validity of the Europeanization hypothesis regarding the impact of macroeconomic adjustment policies followed in Greece and Spain since the mid-1980s on domestic social policy arrangements. According to the Europeanization hypothesis, Southern European economies would constitute the largest ‘misfits’, thereby inviting massive adaptational pressures for macroeconomic adjustment. Such pressures would lead to a substantial weakening of their welfare model and a radical restructuring of their labor regulation systems. We examine welfare programs and labor relations, and identify political and institutional structures acting as intervening variables between adaptational pressures and reform outcomes. Contrary to the Europeanization hypothesis, very low levels of adaptational pressure in Spain have led to a disproportionately high level of change in social policy. What is more, higher levels of adaptational pressure in Greece have failed to translate into sweeping social policy change. In both cases, the restructuring of their labor regulatory systems has been less dramatic than originally predicted