Was Pierson right? A synthetic control analysis of Reagan and Thatcher’s welfare state retrenchments

Pierson’s highly-regarded book, Dismantling the Welfare State? Reagan, Thatcher, and the Politics of Retrenchment suffers from a serious methodological drawback. The author draws his conclusions about welfare state resilience by scrutinizing what happened to social policy structure during and at the end of the two governments selected, ending up by falling into the well-known ‘post hoc ergo propter hoc’ fallacy. The present paper sets out to replicate Pierson’s analysis in a counterfactual framework of causal inference. Adopting the synthetic control method, the trajectories of several UK and US welfare-state measures, observed in the presence of Thatcher and Reagan’s administration, were contrasted with corresponding trajectories reconstructed in the absence of neo-conservative governments. This exercise confirmed Pierson’s substantive conclusion: the neo-conservative revolution of the 1980s did not significantly alter the UK or USA welfare state.

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Publication number: Working Paper 2018-02
Date: April 2018
JEL Classification: C54, D78, H53, H55
  • Welfare state retrenchment
  • Synthetic control analysis
  • Neo-conservative politics
  • Reagan and Thatcher’s administration
  • Pierson’s book