The dependent variable problem revisited: methods, concepts, and scope in the welfare retrenchment literature

This chapter discusses whether and to what extent there is “dependent variable problem†in the most recent welfare state retrenchment literature. The problem is previously defined as the vagueness, lack of consensus and inconsistencies in the conceptualization and operationalization of welfare retrenchment. Some scholars have argued that welfare state retrenchment should be measured with expenditure levels, while some others suggest the use of right based measures (e.g. replacement rates). However, more recently, there appeared a silent consensus on the use of social rights as the best choice over expenditures. This chapter is based on a systematic literature review of empirical analyzes on welfare retrenchment that have been published after those reviewed by Green-Pedersen (2004). Despite the theoretical consensus, our analysis points out that expenditure is still the most commonly used indicator to represent and analyze welfare retrenchment. It also allows to figure out to what extent the DVP has been resolved.