Abstract

In recent years, scholars have observed that political parties’ policy positions frequently fit the preferences of well-to-do voters better than those of the less well-to-do; a phenomenon known as policy congruence inequality. While the existence of inequality in policy congruence is well-established, we currently only have a modest understanding of the causes of it. We develop an argument proposing that the political mobilization of citizens with low socioeconomic status both in the parliamentary channel, in the form of high turnout, and in the extra-parliamentary channel, in the form of high union density, is pivotal. Both high turnout and union density force parties to pay more attention to the preferences of the disadvantaged, thereby creating lower policy congruence inequality. To test the argument, we have collected and harmonized election surveys and party manifestos covering 90 elections in Australia, Denmark, Germany, Sweden, Switzerland, the United Kingdom, and the United States, covering several decades until today, yielding more than 120,000 voter-party dyads. Employing this new dataset, our results confirm that the political mobilization of citizens with low socioeconomic status is a strong predictor of policy congruence inequality. This finding nuances the conclusion of extant research by showing that low-SES citizens are not always on the losing side politically. It also implies the important role of maintaining or maybe even increasing turnout and union membership among the disadvantaged in society. Places where either turnout or union density is slipping these years are likely to witness further increases in policy congruence inequality in the years to come.

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Abstract

Stagnating incomes have been a widespread concern in advanced democracies over the past decades. However, despite a turn towards dynamic frameworks, the consequences of stagnation on political support for the welfare state are still unclear. This study introduces the distinction between ‘absolute’ and ‘relative’ income stagnation – that is, experiencing stagnating incomes over time (without reference to other groups) and in relative comparison to other groups – and explores how they shape citizens’ attitudes towards redistribution. I argue that absolute and relative stagnation have opposite effects on redistributive preferences. Contrary to political economy theories, I expect that low absolute income growth reduces demand for redistribution, because it reduces voters’ ability and willingness to afford welfare state policies. Support for this hypothesis is provided in an empirical analysis that combines novel estimates for absolute and relative income stagnation with longitudinal survey data on redistribution preferences in 14 advanced democracies between 1985 and 2018. The distinction between absolute and relative experiences has broader implications for comparative politics research and might contribute to explain why income stagnation and rising inequality have not led to higher political demand for redistributive welfare policy.

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Abstract

The declining ‘subjective social status’ of the low-educated working class has been advanced as a prominent explanation for right-wing populism. The working class has certainly been adversely affected by rising income inequality over the past decades, but we do not actually know if their perceived standing in the social hierarchy has declined correspondingly over time. This article examines trends in subjective social status in two ‘most likely cases’ – Germany and the US – between 1980 and 2018. We find that the subjective social status of the working class has not declined in absolute terms. However, there is evidence for relative status declines for the working class in Germany and substantial within-class heterogeneity in both countries. These findings imply that rising income inequality has a nuanced impact on status perceptions. When assessing the role of subjective social status for political outcomes, longitudinal perspectives that consider both absolute and relative changes seem promising.

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Abstract

The COVID-19 pandemic has revived discussions about universal basic income (UBI) as a potential crisis response. Yet despite favorable circumstances, little actual policy change in this area was observed. This article seeks to explain this absence of policy change and to reflect on the prospects for introducing UBI schemes after the pandemic in European democracies. I argue that public opinion on UBI provides few electoral incentives to push for social policy change. Using prepandemic data from 21 European democracies and pandemic data from the UK, I show that political support for UBI has been divided between different groups who advocate conflicting policy goals and who hold divergent views about existing welfare state arrangements. While support for UBI might have increased during the pandemic, the underlying political dividing lines are likely to have remained intact. Due to these enduring divisions and the stable support for existing social policy arrangements over an untested policy, the prospects for introducing UBI schemes in the post-pandemic world remain uncertain.

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Abstract

There is long-standing evidence within the literature of class cleavages in social policy preferences. We re-evaluate class cleavages in support for redistribution by specifically focusing on the role played by cross-class embeddedness: the idea that individuals can be embedded in multiple social classes through family ties. Stronger affinity to the working class is hypothesized to be associated with stronger support for redistribution. We construct a harmonized measure of cross-class embeddedness combining information on social class positions for individuals, their parents, and their partner. The results demonstrate that cross-class embeddedness is highly common in the European context and linear probability models show that it is robustly associated with support for redistribution. Individuals who have more ties with the working classes are more supportive of redistribution and the effect is somewhat stronger for women than for men. Cross-class embeddedness through close family ties accounts for substantial heterogeneity within the upper classes. We conclude that family needs to be recognized as the unit of stratification that influences material interests and as a context of socialization that likely shapes solidarity. Cross-class embeddedness through family ties is thus important to consider in any analysis of social policy preferences.

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Abstract

An emerging consensus claims that “subjective” (mis)perceptions of income inequality better explain redistributive preferences than actual “objective” conditions. In this paper, we critically re-assess this view. We compare perceived and actual income positions as predictors for preferences for redistribution. We argue that perceived income is partly endogenous to actual income and its effect on preferences conditional on ideology. Using an original survey experiment from Switzerland, we show that the predictive power of perceived income is lower compared to actual income. Perceived income is only associated with redistribution preferences among centre-right respondents, but not among left-wing respondents. Furthermore, providing respondents with corrective information about their true position in the income hierarchy has no effect on redistribution preferences. These findings go against the new consensus about the superior explanatory power of subjective perceptions of income inequality. We argue instead that absolute objective conditions should be at the centre of explaining redistributive preferences.

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Abstract

While there is renewed interest in earnings differentials between social classes, the contribution of social class to overall earnings inequality across countries and net of compositional effects remains largely uncharted territory. This paper uses data from the European Union Statistics on Income and Living Conditions to assess earnings differentials between social classes (as measured by ESeC) and the role of between-class inequality in overall earnings inequality across 30 European countries. We find that there is substantial variation in earnings differences between social classes across countries. Countries with higher levels of between-class inequality tend to display higher levels of overall earnings inequality, but this relationship is far from perfect. Even with highly aggregated class measures, between-class inequality accounts for a non-negligible share of total earnings inequality (between 15 and 25% in most countries). Controlling for observed between-class differences in composition shows that these account for much of the observed between-class earnings inequality, while in most countries between-class differences in returns to observed compositional variables do not play a major role. In all these respects we find considerable variation across countries, implying that both the size of between-class differences in earnings and the primary mechanisms that produce these class differences vary substantially between European countries.

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Abstract

How can we explain variation in demand for redistribution among cross-pressured voters? We argue that redistributive preferences reflect an interaction between material self-interest and political ideology. The self-interest argument predicts growing opposition to redistribution as income increases, while the argument of ideologically driven preferences suggests that left-leaning citizens are more supportive of redistribution than right-leaning citizens. Focusing on crosspressured voters, we expect that the difference in redistribution preferences between left- and right-leaning citizens is smaller at the bottom of the income hierarchy than at the top. Among the group of left-leaning citizens, the role of material self-interest is expected to be smaller than among right-leaning citizens. We provide evidence in line with our argument analysing data from the European Social Survey in 25 European democracies between 2008 and 2018.

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Abstract

Income inequality and radical right parties have both been on the rise in Western democracies, yet few studies explore the linkages between the two – despite prominent arguments about voters feeling ‘left behind’. We argue that rising inequality not only intensifies relative deprivation, but also signals a potential threat of social decline, as gaps in the social hierarchy widen. Hence, voters higher up in the social hierarchy may turn to the radical right to defend existing social boundaries. Using International Social Survey Programme (ISSP) data from 14 OECD countries over three decades, we find that rising income inequality increases the likelihood of radical right support – most pronouncedly among individuals with high subjective social status and lower-middle incomes. Adding to evidence that the threat of decline, rather than actual deprivation, pushes voters towards the radical right, we highlight income inequality as the crucial factor conditioning perceived threats from a widening social hierarchy.

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LSE European Politics & Policy (EUROPP) Blog

Abstract

This article studies earnings inequality between social classes across 30 European countries. Class inequality in earnings is found across the board although there are some exceptions. However, the degree of class inequality varies strongly across countries being larger in Western and Southern European countries and smaller in Eastern and Northern European countries. Furthermore, we find that differences in class composition in terms of observed characteristics associated with earnings account for a substantial proportion of these between-class differences. Differences between classes in the returns to education and other characteristics play less of a role. In all these respects there is a sizeable cross-national variation. This points to important differences between countries in how earnings are structured by social class.

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Abstract

In striking contrast to the notion that democracy is under threat because ‘the middle’ has been ‘squeezed’ over recent decades, Iversen and Soskice (2019) in their book, Democracy and Prosperity, present an optimistic account about the future of democracy. This paper examines their key assumption that the symbiosis between democracy and advanced capitalism is underpinned by electorally decisive middle-class voters that secure a constant share of economic growth. Using comprehensive data on income trends, it is shown that this claim does not stand up to scrutiny: median income has often lagged behind the mean in household surveys, rather than kept pace with it as Iversen and Soskice claim. Strong real income growth has generally not compensated the middle for lagging behind. The varying fortunes of the middle in securing its share of economic growth have implications for the broader debate about inequality and democracy.

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Abstract

The rise of flexible employment in advanced democracies has been predominantly studied in the insider-outsider framework of the dualization literature. However, against the background of rising income inequality, it seems questionable to assume that all labor market insiders are equally affected by flexibilization. This paper explores whether flexibilization increases wage inequality among labor market insiders. I argue that flexibilization exposes insiders to a set of wage risks that are concentrated among low- and middle-income insiders, creating downward wage pressure on those insiders. The empirical analysis, covering democracies between  and , finds that the deregulation of non-standard employment is associated with declining wage shares of low-income and middle-income earners, while top earners benefit. These major distributional shifts imply an important qualification of the dualization literature: rather than pitting insiders against outsiders, flexibilization ‘at the margins’ seems to exacerbate divides among insiders.

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Abstract

Technology entrepreneurs have endorsed a universal basic income (UBI) as a remedy against disruptions of the work force due to automation. The advancement of information technologies could thus drastically reshape welfare state policy, but its impact on citizens’ preferences about UBI is unexplored. We extend previous research on citizens’ preferences showing a link between job automation and demand for redistribution to the case of UBI preferences. Using European Social Survey data in 21 countries, we find no association between risk of job automation and UBI support. Our findings suggest that UBI and redistribution preferences differ in two important ways: First, opinion formation about UBI is still ongoing. Second, demand for UBI is lower than demand for redistribution, and traditional supporters of redistribution are sceptical about an UBI. This points to the multidimensionality of policy preferences. Its universalistic nature could imply that UBI support is more culturally driven than traditional welfare policies.

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Social Europe Blog (with Brian Nolan)

Abstract

What explains the large cross-country variation in the wage premium for higher education? Economic analyses of wage differentials by education point to technological change and globalization, but we know little about the impact of different types of public policies. We argue that public education spending and tax-transfer policies contain the spread of ‘education premiums’ through material incentives (decommodification) and attitudinal responses, i.e. changing attitudes towards education premiums and the motivation to request a maximum return on individual investment in education. The empirical analysis relies on a new dataset of education premiums constructed from Luxembourg Income Study surveys, covering 22 OECD countries between 1989 and 2014. We provide evidence that taxation levels and public education spending particularly affect education premium levels and changes within countries. For the literature on income inequality, these findings imply the need to pay attention more systematically to redistributive policies shaping the ‘market’ distribution of incomes.

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Abstract

This contribution explores common trends in inequality and redistribution across Organization for Economic Co-operation and Development (OECD) countries from the late 1980s to 2013. Low-end inequality rises during economic downturns while rising top-end inequality is associated with economic growth. Most countries retreated from redistribution from the mid-1990s until the onset of the Great Recession, and compensatory redistribution in response to rising unemployment was weaker in 2008–2013 than in the first half of the 1990s. As unemployment and poverty risk have become increasingly concentrated among workers with low education, middle-income opinion has become more permissive of cuts in unemployment insurance generosity and income assistance to the poor. At constant generosity, the expansion of more precarious forms of employment reduces compensatory redistribution during downturns because temporary employees do not have the same access to unemployment benefits as permanent employees.

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Abstract

Do coalition governments really suffer from short time horizons in fiscal policymaking, as posited by standard political-economy models? This article focusses on coalitions that have created high levels of familiarity through shared governing experiences in the past and that are likely to cooperate again in future governing coalitions. I argue that such coalitions have incentives to internalise the future costs of debt accumulation and reach credible agreements to balance their constituencies’ fiscal preferences. Moreover, sustaining broad coalitions should have electoral advantages to implementing controversial economic reforms, thus resulting in lower debt increases compared not only with less durable coalitions but also with single-party governments. Comparing 36 economically advanced democracies between (up to) 1962 and 2013, I estimate the effects of coalitions’ cooperation prospects on the dynamics of public debt. The findings indicate that long time horizons can help coalitions to overcome intertemporal coordination problems and to reach specific policy goals.

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Abstract

As often pointed out in the literature on the European debt crisis, the policy programme of austerity and internal devaluation imposed on countries in the Eurozone's periphery exhibits a lack of democratic legitimacy. This article analyses the consequences these developments have for democratic support at both the European and national levels. We show that through the policies of economic adjustment, a majority of citizens in crisis countries has become ‘detached’ from their democratic political system. By cutting loose the Eurozone's periphery from the rest of Europe in terms of democratic legitimacy, the Euro has divided the union, instead of uniting it as foreseen by its architects. Our results are based on aggregated Eurobarometer surveys conducted in 28 European Union (EU) member states between 2002 and 2014. We employ quantitative time-series cross-sectional regression analyses. Moreover, we estimate the causal effect of economic adjustment in a comparative case study of four cases using the synthetic control method.

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Abstract

What are the conditions under which some austerity programmes rely on substantial cuts to social spending? More specifically, do the partisan complexion and the type of government condition the extent to which austerity policies imply welfare state retrenchment? This article demonstrates that large budget consolidations tend to be associated with welfare state retrenchment. The findings support a partisan and a politico-institutionalist argument: (i) in periods of fiscal consolidation, welfare state retrenchment tends to be more pronounced under left-wing governments; (ii) since welfare state retrenchment is electorally and politically risky, it also tends to be more pronounced when pursued by a broad pro-reform coalition government. Therefore, the article shows that during budget consolidations implemented by left-wing broad coalition governments, welfare state retrenchment is greatest. Using long-run multipliers from autoregressive distributed lag models on 17 OECD countries during the 1982–2009 period, substantial support is found for these expectations.

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Abstract

Suffering from reduced competitiveness, some member countries of the Eurozone are forced to pursue a policy of internal devaluation. This leads to a deficit of legitimation both with regard to the input and the output of the democratic process. We analyse the development of support of the democratic political system on the domestic and European level. Our comparison of 28 EU member countries covers the period from 2001-2013 and is based on Eurobarometer data. We show that in terms of political legitimation Europe drifts apart. The stronger internal devaluation is forced upon a country, the more the citizens of this country withdraw their support for the democratic system on the domestic and European level.

Zusammenfassung

Um ihre verloren gegangene Wettbewerbsfähigkeit wiederherzustellen, bleibt den unter Zahlungsbilanzdefiziten leidenden Ländern des Euroraums nur die interne Abwertung: eine Politik zur Senkung des Lohn- und Preisniveaus. Wir argumentieren, dass diese Politik sowohl auf der Output- als auch auf der Input-Dimension einen Mangel an demokratischer Legitimation aufweist. Daher untersuchen wir die Entwicklung der Unterstützung des politischen Systems, sowohl auf der Ebene des Nationalstaats als auch der Europäischen Union. In einem empirischen Vergleich der 28 EU-Mitgliedsländer zwischen 2001 und 2013 zeigen wir anhand aggregierter Eurobarometerdaten, dass Europa im Bereich der politischen Legitimation auseinanderdriftet. Je stärker ein Land zur internen Abwertung gezwungen wird, desto mehr wendet sich seine Bevölkerung vom demokratischen politischen System auf der nationalen und supranationalen Ebene ab.

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Abstract

Under what political conditions do governments consolidate their public finances? In this article we focus on two factors: the partisan complexion of governments and the breadth of the governing coalition. We demonstrate that the probability for a government to initiate a fiscal consolidation program is highest under parties of the political right, as well as, under narrow reform coalitions (which we operationalize as one party governments and minimal winning coalitions). We observe the exact opposite when it comes to the extent of these adjustment measures. Here, the breadth of the policy coalition exerts a positive influence. Along these lines, consolidation packages implemented by right parties are smaller in size than those of their centrist or leftist competitors. On the basis of a quantitative analysis of 17 OECD countries between 1978 and 2009, we explain these findings with the strategic and electoral options of political actors.

Zusammenfassung

Welche politischen Voraussetzungen müssen gegeben sein, damit Regierungen den Staatshaushalt konsolidieren? In diesem Beitrag konzentrieren wir uns auf zwei Erklärungsgrößen: Die parteipolitische Zusammensetzung einer Regierung und die Breite der Regierungskoalition. Wir zeigen einerseits, dass die Wahrscheinlichkeit der Initiierung eines Konsolidierungsprogramms unter Parteien der politischen Rechten sowie unter kleinen Reformkoalitionen (Einparteienregierungen und minimal winning Koalitionen) am höchsten ist. Andererseits finden wir ein nahezu entgegengesetztes Muster bezüglich des Umfangs der verabschiedeten Sparmaßnahmen. Hier zeigt sich, dass die Breite der Regierungskoalition grundsätzlich einen positiven Einßuss auf die Größe des Konsolidierungsprogramms ausübt. Zudem fallen die Sparpakete rechter Parteien generell bescheidener aus als jene ihrer Konkurrenten der politischen Mitte und Linken. Wir erklären diese Ergebnisse mit den strategischen und wahlpolitischen Optionen der Akteure, auf Basis eines Vergleichs von 17 OECD-Ländern zwischen 1978 und 2009. 

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Abstract

This chapter explores how technological change affects the demand for labour market policy. A growing literature has argued that individuals whose jobs are at risk to be automated demand compensatory policies. The empirical evidence generally suggests a positive association between automation risk and preferences for unemployment benefit policies, but not for other policy areas such as active labour market policy or universal basic income. The chapter further discusses important recent debates about the overlap between objective and subjective risks related to job automation. Finally, it explores how the effect of technological change varies across countries and points to the role of existing labour market policy contexts.

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Abstract

Liberalization, broadly understood as the removal of market barriers, has been a prominent trend in both coordinated and liberal market economies the last fifty years. For political dynamics, the process of liberalization is relevant because reforms may create clear groups of winners and losers. However, our theoretical and empirical knowledge about the distributional implications of liberalization is still limited. We argue that liberalization can increase inequality in two ways: either by increasing market income inequality or by reducing compensatory redistribution through government taxes and transfers. In this chapter, we study the relationship between liberalization and income inequality using an encompassing new database on liberalizing reforms in 13 policy fields, covering 18 advanced capitalist democracies between 1974 and 2013. Using error correction models, we find that the more markets are liberalized, the more disposable income inequality increases in the long run. This effect is driven both by rising market inequality and declining redistribution. Furthermore, we find that the impact of liberalization is moderated by compensatory de-liberalizing reforms, and that inequality partly reflects the long-term outcome of previous levels of regulation.

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Abstract

Support for the radical right has risen in most Western democracies. Globalization and modernization processes are usually seen as the source of this development, reshaping political conflicts and producing new groups of people that feel ‘left behind’. However, few studies test how the relatively common trends in globalization shape the variation in the timing and extent of radical right support across countries. Focusing on the economic dimension of the ‘losers of globalization’ theory, we argue that income inequality is a suitable indicator to measure the extent to which some groups have fallen behind and to capture the fear of decline in material well-being of people not (yet) at the bottom of the income distribution. The relative deterioration in material conditions, we argue further, translates into a lower subjective social status of vulnerable groups who then turn towards the radical right. By cultivating nativism and thus providing non-economic criteria of social status, the radical right becomes more attractive as societies become more unequal. We show evidence for our hypothesis by comparing vote shares for radical right parties in 20 Western democracies between 1980 and 2016. The findings indicate that rising income inequality substantially increases support for the radical right in the long run. In addition, rising inequality translates into lower subjective social status of nontertiary educated men and this process of status decline further contributes to radical right support. Hence, there are both material and non-material linkages between income inequality and radical right support. 

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Abstract

Over the past decades, many Western democracies have deregulated flexible employment. At the same time, income inequality has increased. This dissertation explores the association between these two trends. It focuses on two types of wage-related risks that regular workers are exposed to: low-wage competition and adverse income prospects. I argue that flexibilization spreads risk disproportionally towards workers in the middle of the earnings distribution. These workers then face pressure to defend their wage levels against low-wage competition from the cheaper alternative of temporary workers. They also frequently lack the mobile, high-skilled profiles conducive to secure career advancement and long-term wage growth in flexible work environments.

This argument departs from several influential accounts in the literature. First, it disputes a core premise of the dualization literature: that “insiders” employed in secure jobs are insulated against adverse labor market changes. Because labor market policies “at the margins” have repercussions on insiders, it is important to consider the heterogeneity of wage prospects among workers in regular employment. Second, the policy changes towards flexible employment provide an explanation of the widespread rise of inequality in coordinated market economies in Europe. Third, it introduces a new aspect to the debate about the “declining middle class”: the focus on wage-related risks. These risk types encompass developments such as long-term wage stagnation, which arguably are crucial to understanding contemporary electoral shifts. Wage-related risks are mostly omitted from theories on the welfare state that focus exclusively on employment-related risks.

Comparing 25 OECD countries between 1985 and 2015, I find that flexible employment policies affect earnings inequality among regular workers as well as subjective perceptions of labor market risks. The macro-level analysis based on LIS data shows that flexibilization is associated with earnings losses for middle-income workers, while it has neutral effects on low-wage earners and positive effects on top earners. The micro-level analysis based on ISSP data shows that flexibilization increases middle-income workers’ levels of subjective job insecurity relative to low-income workers. In deregulated contexts, risk spreads towards middle-income workers. Finally, the in-depth analysis of the crucial case of Germany, where major flexibilization reforms took place, reveals that flexibilization results in long-term wage stagnation for middle-income workers.

This dissertation provides multi-faceted data on the position of workers in the middle of the earnings distribution over the past three decades. Aside from “objective” developments of earnings inequality, it provides detailed data on workers’ subjective perception of economic risks. The findings contribute to understanding the various consequences of flexible employment for income inequality. The trajectories of pivotal middle-class voters suggest that political support for flexible employment is built up on shaky ground. 

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