Can Path Dependence Explain Institutional Change? Two Approaches Applied to Welfare State Reform

Path dependence as a concept in institutional theories has become increasingly popular in economics and other social sciences. The key idea is that in a sequence of events, the latter events are not (completely) independent from those that occurred in the past. Yet, common usage of the concept often subsumes two markedly different models and approaches to understand historical sequencing. The two main processes of the past shaping the future - diffusion and developmental pathways - must be distinguished analytically. This paper juxtaposes (1) the unplanned 'trodden path' that takes shape through the subsequent repeated use by other individuals of that spontaneously chosen path, and (2) the ?branching pathways? or juncture at which one of the available alternative pathways must be chosen in order to continue a journey. Furthermore, the typical approaches and their explanatory purchase are discussed in reference to explanations of institutional change. The paper shows that the first path dependence theorem is too deterministic and inflexible, whereas the second approach is sufficiently supple to analyze various forms of institutional change.