Social Protection Around the World

Abstract

This article develops and tests a political model specifying the conditions under which external risk leads to the introduction of redistributive social policies and argues that external risk sharpens a domestic political cleavage over the design of institutions of social insurance. Workers in sectors facing high volatility of income will support the introduction of social policies characterized by broad levels of insurance coverage and high redistribution of costs across occupations, whereas workers in low-risk sectors will oppose redistributive social policies. The strength of preexisting state institutions also affects policy preferences of various sectors. In the presence of weak, ineffective states that are unable to collect social insurance contributions from sectors that are net contributors to the system, high-risk sectors will find redistributive social policies unattractive. The article tests predictions of the model using new measures of the level of social insurance coverage in more than 100 countries.