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Reducing Risk as well as Inequality: Assessing the Welfare State's Insurance Effects

Published online by Cambridge University Press:  08 July 2020

Jacob S. Hacker  and
Philipp Rehm Open the ORCID record for Philipp Rehm [Opens in a new window]
Jacob S. Hacker
Affiliation:
Yale University, New Haven, CT, USA
Philipp Rehm*
Affiliation:
Department of Political Science, Ohio State University, Columbus, OH, USA
*
*Corresponding author. E-mail: rehm.16@osu.edu
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Abstract

Leading accounts of the politics of the welfare state focus on societal demands for risk-spreading policies. Yet current measures of the welfare state focus not on risk, but on inequality. To address this gap, this letter describes the development of two new measures, risk incidence and risk reduction, which correspond to the prevalence of large income losses and the degree to which welfare states reduce that prevalence, respectively. Unlike existing indicators, these measures require panel data, which the authors harmonize for twenty-one democracies. The study finds that large losses affect all income and education levels, making the welfare state valuable to a broad cross-section of citizens. It also finds that taxes and transfers greatly reduce the prevalence of such losses, though to varying degrees across countries and over time. Finally, it disaggregates the measures to identify specific ‘triggers’ of large losses, and finds that these triggers are associated with risks on which welfare states focus, such as unemployment and sickness.

Keywords

panel dataredistributionriskwelfare states
Type
Letter
Information
British Journal of Political Science , Volume 52 , Issue 1 , January 2022 , pp. 456 - 466
Copyright
Copyright © Cambridge University Press 2020

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https://doi.org/10.7910/DVN/NZTGVE
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