Risks at Work: The Demand and Supply Sides of Government Redistribution

Thomas Cusack, Torben Iversen and Philipp Rehm

Oxford Review of Economic Policy, 2006, vol. 22, issue 3, 365-389

Abstract: To comprehend how the welfare state adjusts to economic shocks it is important to get a handle on both the genesis of popular preferences and the institutional incentives for governments to respond to these preferences. This paper attempts to do both, using a general theoretical framework and detailed data at both the individual and national levels. In a first step, we focus on how risk exposure and income are related to preferences for redistribution. To test our hypotheses, we extract detailed risk-exposure measures from labour-force surveys and marry them to cross-national opinion survey data. Results from analysis of these data attest to the great importance of risks within the labour market in shaping popular preferences for redistributive efforts by governments. In a second step, we turn our attention to the supply side of government redistribution. Institutions, we argue, mediate governments' reactions to redistributional demands following economic shocks. Using time-series cross-country data, we demonstrate how national training systems, and electoral institutions, as well as partisanship, shape government responses. Copyright 2006, Oxford University Press.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:22:y:2006:i:3:p:365-389

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