Employment insecurity and social policy: preferences for investment vis-a-vis consumption

Abstract

While existing studies on redistribution politics provide explanations of 'who' supports redistribution, we know very little about who supports 'what' type of redistribution. This omission is unfortunate because government spending has diverse functions and impacts, which are not differentiated in existing research. By capturing individual preferences for specific types of government policy under conditions of unemployment, we assess how economic insecurity influences calls for government action. Building on the analytic distinction between social consumption and social investment, this study examined the role of unemployment in social policy preferences. First, the experience of unemployment drives individual demand for social consumption but reduces support for social investment. Second, income levels have a heterogeneous effect on social policy preferences. In other words, a high income level is positively associated with support for social investment but negatively associated with support for social consumption. Third, the income effect is conditional on the experience of job loss, with the effect more pronounced in lower income groups than in higher income groups. An analysis of European Social Survey (ESS) Wave 8 (2016) data found empirical evidence supporting arguments about the impact of economic insecurity on individual preferences for a particular type of social expenditure.