Social Policy by Popular Demand

Abstract

Why are unemployment benefits more generous in some countries? This article argues that citizens trade off the redistributive and insuring effect of social insurance. As a result, the distribution of risk in a society has important consequences via popular demand for social policy-making. At the microlevel, the article shows that, in addition to income, the risk of unemployment is a key predictor of individual-level preferences for unemployment benefits. Based on the microlevel findings, the article argues that at the macrolevel the homogeneity of the risk pool is an important determinant of benefit generosity: the more equally unemployment risk is distributed, the higher unemployment replacement rates are. Empirical testing at both levels finds support for this account of social policy by popular demand.