placestats

Active labour market spending vs. Liberal democracy

Holds up after adjusting for income

Across 42 countries, Active labour market spending and Liberal democracy rise and fall together at r = +0.48 (on a scale from −1 to +1, where 0 means no link). Comparing only countries with similar income (GDP per person) shrinks it to +0.30 (q = 0.047, allowing for the many pairs tested). Much of the first figure is that both measures rise with national income, but a weak positive link remains.

Comparing countries across the middle half of active labour market spending, 0.178% to 0.696% of GDP, liberal democracy is better by 0.105 points at the top of that range than the bottom. Comparing only countries with similar national income, the gap is 0.063 points.

Link before adjusting (r)+0.478p = 0.001 · 42 countries
After adjusting for national income+0.299p = 0.057 · likely range [-0.01, +0.56]
p, allowing for regions0.004standard error 0.052 · 5 regions
Check for luck (q)0.047across 12,497 pairs

How to read these.r runs from −1 (one goes up as the other goes down) to +1 (they rise together), and 0 means no link. Adjusting for national income means comparing countries with the same GDP per person, so differences in wealth can’t explain the link. Income is used in percentage terms, since an extra $1,000 means more to a poor country than to a rich one. p is how likely a link this strong would be if there were really none. Below 0.05 means it is unlikely to be chance. Very small values are written in short form: 1.1e-32 means a decimal point followed by 31 zeros and then 11, so very close to zero. The likely range is where the true figure probably lies, and a range that crosses zero means the link could easily be chance. Countries in the same region tend to resemble each other, so the third figure allows for that, which gives a fairer p. The standard error is the typical size of the error in r. Finally, testing this many pairs means some will look strong by luck alone. A q below 0.05 means this link is unlikely to be one of those.

Active labour market spending · % of GDPlink with income +0.54 · moderate
Liberal democracy · index (0-1)link with income +0.52 · moderate

“Link with income” is how closely each measure tracks GDP per person across countries, from −1 to +1.

Every country as a dot

Active labour market spending · % of GDP →Liberal democracy · index (0-1) →0.001%1.64%0.110.884Australia: 0.368% of GDP, 0.793 index (0-1)Austria: 0.866% of GDP, 0.757 index (0-1)Belgium: 0.866% of GDP, 0.794 index (0-1)Bulgaria: 1.06% of GDP, 0.499 index (0-1)Canada: 0.214% of GDP, 0.736 index (0-1)Switzerland: 0.606% of GDP, 0.843 index (0-1)Chile: 0.134% of GDP, 0.781 index (0-1)Colombia: 0.436% of GDP, 0.555 index (0-1)Costa Rica: 0.129% of GDP, 0.809 index (0-1)Czechia: 0.288% of GDP, 0.794 index (0-1)Germany: 0.562% of GDP, 0.782 index (0-1)Denmark: 1.64% of GDP, 0.884 index (0-1)Spain: 0.923% of GDP, 0.741 index (0-1)Estonia: 0.549% of GDP, 0.837 index (0-1)Finland: 0.838% of GDP, 0.808 index (0-1)France: 0.835% of GDP, 0.8 index (0-1)United Kingdom: 0.153% of GDP, 0.689 index (0-1)Greece: 0.306% of GDP, 0.568 index (0-1)Croatia: 0.622% of GDP, 0.593 index (0-1)Hungary: 0.329% of GDP, 0.315 index (0-1)Ireland: 1.22% of GDP, 0.822 index (0-1)Iceland: 0.397% of GDP, 0.72 index (0-1)Israel: 0.131% of GDP, 0.588 index (0-1)Italy: 0.442% of GDP, 0.642 index (0-1)Japan: 0.295% of GDP, 0.734 index (0-1)Korea, Rep.: 0.423% of GDP, 0.739 index (0-1)Lithuania: 0.37% of GDP, 0.712 index (0-1)Luxembourg: 0.699% of GDP, 0.777 index (0-1)Latvia: 0.138% of GDP, 0.751 index (0-1)Mexico: 0.001% of GDP, 0.221 index (0-1)Netherlands: 1.51% of GDP, 0.774 index (0-1)Norway: 0.377% of GDP, 0.847 index (0-1)New Zealand: 0.269% of GDP, 0.787 index (0-1)Peru: 0.087% of GDP, 0.506 index (0-1)Poland: 0.523% of GDP, 0.645 index (0-1)Portugal: 0.687% of GDP, 0.717 index (0-1)Romania: 0.042% of GDP, 0.464 index (0-1)Slovak Republic: 0.166% of GDP, 0.573 index (0-1)Slovenia: 0.227% of GDP, 0.589 index (0-1)Sweden: 1.18% of GDP, 0.853 index (0-1)Turkiye: 0.014% of GDP, 0.11 index (0-1)United States: 0.078% of GDP, 0.571 index (0-1)BGRCHLCRIDNKHUNLVAMEXNLDSWETUR

best-fit line line after adjusting

Four ways to measure the link

MethodrpCountries
Standard (Pearson), not adjusted+0.4780.00142
By rank (Spearman), not adjusted+0.5160.00042
Standard (Pearson), adjusted for national income+0.2990.05742
By rank (Spearman), adjusted for national income+0.2900.06642

The rank version uses only each country’s place in line, from lowest to highest, so a few extreme countries count for less. The adjusted and unadjusted versions use the same 42 countries: those that report both measures and GDP per person. So the gap between them comes from the adjustment, not from a change in which countries are counted. Drop in the size of r after adjusting: +0.179 (a minus sign means it grew).

How solid is it?

Leaving out one country at a time, r ranges from +0.253 (without USA) to +0.358 (without BGR). The bar above shows that range on a scale from −1 to +1, with the solid line at the full result. The single country that moves r most: BGR (+0.059).

Within each region

Countries are not separate, unrelated cases, and neighbors share a lot. A link that holds inside each region is far more believable than one that shows up only when comparing regions.

nr
Europe & Central Asia30+0.35

By income third

If the link shows up only in the richest third of countries, it is a feature of rich countries, not a general pattern.

nr
Poorest third14+0.24
Middle third14+0.32
Richest third14+0.58

By largest religious group

Countries grouped by a label they share, such as main religion, rather than by a number. Groups of fewer than twelve countries are not shown. These groups differ in income, region and history all at once. So a gap between them is a place to start asking questions, not an answer.

nr
Christians35+0.31

Without outliers (countries far outside the middle half of countries on either measure, by more than one and a half times the width of that middle half): r = +0.197 after dropping 4 countries.

Two series, one country

Both measures over the years for one country you pick. The two charts are stacked so they share only the years along the bottom.

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Over time, within countries

Everything above compares countries with each other at one moment. This section compares each country only with itself over 34years. So a link here can’t come from anything about a country that stays the same, such as its history, geography, institutions or culture.

Within countries over time, there is no link that is clearly more than chance (r = -0.025, comparing each country only with itself over the years, and each year only with the same year elsewhere). Whatever the cross-country picture shows, countries whose active labour market spending moved did not tend to see their liberal democracy move with it.

Across countries (adjusted)+0.299for comparison
Within countries-0.069each country vs itself
…and vs the same year elsewhere-0.025q = 0.722 · 42 countries
Year-on-year changes-0.016q = 0.745

1,205 country-years (one country in one year), 42 countries, 1990–2023, about 29 years each on average. Share of the variation that happens within countries over time: 32% for Active labour market spending, 15% for Liberal democracy. The margins of error allow for each country appearing many times, and for each year’s value being close to the year before.

Year-to-year changes are a cautious test, not a final answer. Looking only at changes from one year to the next removes each country’s own trends. But it also makes measurement mistakes louder, which pulls the results toward zero. A near-zero result here is weak evidence of no link, not proof.

With one measure years behind the other

0.10−0.1-100+10years Liberal democracy trails Active labour market spending →lag -10: r = 0.046 (n = 877)lag -9: r = 0.030 (n = 912)lag -8: r = 0.023 (n = 947)lag -7: r = 0.029 (n = 982)lag -6: r = 0.033 (n = 1,017)lag -5: r = 0.041 (n = 1,051)lag -4: r = 0.040 (n = 1,084)lag -3: r = 0.024 (n = 1,116)lag -2: r = 0.010 (n = 1,147)lag -1: r = -0.006 (n = 1,177)lag +0: r = -0.025 (n = 1,205)lag +1: r = -0.028 (n = 1,206)lag +2: r = -0.026 (n = 1,206)lag +3: r = -0.009 (n = 1,200)lag +4: r = -0.017 (n = 1,183)lag +5: r = -0.046 (n = 1,143)lag +6: r = -0.068 (n = 1,103)lag +7: r = -0.092 (n = 1,062)lag +8: r = -0.091 (n = 1,021)lag +9: r = -0.086 (n = 980)lag +10: r = -0.086 (n = 931)

Same year (lag 0): -0.025. A peak away from zero does not show which comes first. These series change slowly — this year’s value is close to last year’s. That makes the curve smooth and nearly symmetric, whatever produced the data. Even a sharp peak at one lag (a gap of some years) would not prove that one measure changes the other.

The largest value on this curve (-0.09 at lag +7) is higher than the same-year one by 0.07. That gap is not a finding. It is the largest of 21 closely related estimates, and picking the biggest of many tests always makes it look bigger. That is exactly why nothing on this site is ranked or chosen by lag.

The data


% of GDP
index (0-1)		Years
Denmark DNK1.64%0.8842021, 2025
Netherlands NLD1.51%0.7742021, 2025
Ireland IRL1.22%0.8222021, 2025
Sweden SWE1.18%0.8532021, 2025
Bulgaria BGR1.06%0.4992021, 2025
Spain ESP0.923%0.7412021, 2025
Belgium BEL0.866%0.7942021, 2025
Austria AUT0.866%0.7572021, 2025
Finland FIN0.838%0.8082021, 2025
France FRA0.835%0.82022, 2025
Luxembourg LUX0.699%0.7772021, 2025
Portugal PRT0.687%0.7172021, 2025
Croatia HRV0.622%0.5932021, 2025
Switzerland CHE0.606%0.8432021, 2025
Germany DEU0.562%0.7822021, 2025

OECD databases as named on each indicator: PISA, Social Expenditure Database (SOCX), Income Distribution Database, Development Assistance Committee statistics, Family Database, Government at a Glance, Corporate Tax Statistics, employment and environment statistics
Coppedge, M. et al., V-Dem Dataset, Varieties of Democracy (V-Dem) Project

Sources

Active labour market spending

Public spending on active labour market programmes

OECD · via Our World in Data · CC BY 4.0 (OECD terms and conditions) · updated annual, except the snapshots noted per indicator

Training, help finding jobs, wage subsidies and jobs created by government: spending on getting people into work rather than supporting them while out of it.

Liberal democracy

Liberal democracy index

V-Dem Institute, University of Gothenburg · via Our World in Data · CC BY 4.0 · updated annual

Electoral democracy plus limits on the head of government, independent courts and protected personal freedoms. It contains the electoral democracy index as a part, so the two are built from the same numbers and bound to match.

How this was computed

Data used: most recent value in 2010-2025; values come from 2019–2025. To adjust for income, each measure is first predicted from GDP per person (in percentage terms, on a log scale) with a straight-line fit. Only what is left over is then compared. This is called a partial correlation. The line is drawn the standard way (ordinary least squares), which picks the line that comes closest to all the countries at once. The error margins allow for countries in the same region resembling each other, using 5 World Bank regions. The q-value corrects for testing all 12,497 pairs at once, using the Benjamini–Hochberg method. Underlying data last updated DYB 2024. How the country data works · explore Active labour market spending and Liberal democracy

This page shows that two measures go together. It does not show that Active labour market spending changes Liberal democracy, or the reverse. These figures also describe countries, not individual people. See the ecological fallacy.

More links with Active labour market spending or Liberal democracy