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Inequality, Labor Market Segmentation, and Preferences for Redistribution

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  • James Alt
  • Torben Iversen

Abstract

We formalize and examine two overlapping models that show how rising inequality combined with ethnic and racial heterogeneity can explain why many advanced industrial countries have experienced a drop in support for redistribution as inequality has risen. One model, based on altruism and homophily, focuses on the effect of increasing “social distance” between the poor and the middle class, especially when minorities are increasingly overrepresented among the very poor. The other, based on self‐interest, combines an “insurance” model of preferences for redistribution with increasingly segmented labor markets, in which immigration of workers without recognized skills leaves most native workers better off but intensifies competition for low‐end jobs. Empirically, when we estimate parameters from the two models using data from multiple waves of ISSP surveys, we find that labor market segmentation, previously omitted in this literature, has more consistent effects than social distance.

Suggested Citation

  • James Alt & Torben Iversen, 2017. "Inequality, Labor Market Segmentation, and Preferences for Redistribution," American Journal of Political Science, John Wiley & Sons, vol. 61(1), pages 21-36, January.
    • Handle: RePEc:wly:amposc:v:61:y:2017:i:1:p:21-36
    DOI: 10.1111/ajps.12264
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    Cited by:

    1. Elias Naumann, 2018. "Tax Constraints, Social Policy Preferences, and Support for Redistribution," Societies, MDPI, vol. 8(3), pages 1-11, June.
    2. LIM, Taejun & KIM, Aram, 2023. "How Progressive Is the Most Popular Tax Scheme? The Case of South Korea," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 64(1), pages 1-17, June.
    3. Fetscher, Verena, 2020. "Equalizing Incomes in the Future : Why Structural Differences in Social Insurance Matter for Redistribution Preferences," CAGE Online Working Paper Series 463, Competitive Advantage in the Global Economy (CAGE).
    4. Maitreesh Ghatak & Thierry Verdier, 2023. "Inequality and identity salience," Indian Economic Review, Springer, vol. 58(1), pages 181-191, July.
    5. Malte Luebker, 2019. "Can the Structure of Inequality Explain Fiscal Redistribution? Revisiting the Social Affinity Hypothesis," LIS Working papers 762, LIS Cross-National Data Center in Luxembourg.
    6. Finseraas, Henning & Roed, Marianne & Schone, Pal, 2018. "Labour Immigration and Union Strength," IZA Discussion Papers 11723, Institute of Labor Economics (IZA).
    7. Becker, Sascha O. & Fetzer, Thiemo, 2018. "Why an EU Referendum? Why in 2016?," CAGE Online Working Paper Series 366, Competitive Advantage in the Global Economy (CAGE).
    8. Hyunwoo Kim, 2023. "The microfoundation of macroeconomic populism: The effects of economic inequality on public inflation aversion," Economics and Politics, Wiley Blackwell, vol. 35(1), pages 65-96, March.
    9. Timothy Hicks, 2023. "Torben Iversen and Philipp Rehm: Big data and the welfare state: how the information revolution threatens social solidarity," Public Choice, Springer, vol. 194(3), pages 421-426, March.
    10. Dewan, Torun & Wolton, Stephane, 2019. "A Political Economy of Social Discrimination," MPRA Paper 94394, University Library of Munich, Germany.
    11. Liza G. Steele & Nate Breznau, 2019. "Attitudes toward Redistributive Policy: An Introduction," Societies, MDPI, vol. 9(3), pages 1-12, June.
    12. Breznau, Nate & Rinke, Eike Mark & Wuttke, Alexander & Adem, Muna & Adriaans, Jule & Alvarez-Benjumea, Amalia & Andersen, Henrik Kenneth & Auer, Daniel & Azevedo, Flavio & Bahnsen, Oke, 2019. "The Crowdsourced Replication Initiative: Investigating Immigration and Social Policy Preferences. Executive Report," SocArXiv 6j9qb, Center for Open Science.
    13. Nate Breznau & Eike Mark Rinke & Alexander Wuttke & Hung H. V. Nguyen & Muna Adem & Jule Adriaans & Amalia Alvarez-Benjumea & Henrik K. Andersen & Daniel Auer & Flavio Azevedo & Oke Bahnsen & Dave Bal, 2022. "Observing many researchers using the same data and hypothesis reveals a hidden universe of uncertainty," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 119(44), pages 2203150119-, November.
    14. Cervellati, Matteo & Gulino, Giorgio & Roberti, Paolo, 2022. "Random Power to Parties and Policies in Coalition Governments," CEPR Discussion Papers 14906, C.E.P.R. Discussion Papers.
    15. JaeYoul Shin, 2019. "How Can we Achieve a Sustainable Redistributive Policy? Rethinking the Relationship Between Civic Engagement, Neighborhood Relationship and Labor Market Status," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(1), pages 343-362, February.
    16. Asaf Levanon, 2018. "Labor Market Insiders or Outsiders? A Cross-National Examination of Redistributive Preferences of the Working Poor," Societies, MDPI, vol. 8(3), pages 1-15, August.
    17. repec:zbw:bofitp:2018_007 is not listed on IDEAS
    18. Maurice Dunaiski & Janne Tukiainen, 2023. "Does income transparency affect support for redistribution? Evidence from Finland's tax day," Discussion Papers 159, Aboa Centre for Economics.
    19. Marques II, Israel, 2018. "Firms and social policy preferences under weak institutions: Evidence from Russia," BOFIT Discussion Papers 7/2018, Bank of Finland Institute for Emerging Economies (BOFIT).
    20. Henning Finseraas & Marianne Røed & Pål Schøne, 2020. "Labour immigration and union strength," European Union Politics, , vol. 21(1), pages 3-23, March.
    21. Marques II, Israel, 2018. "Firms and social policy preferences under weak institutions : Evidence from Russia," BOFIT Discussion Papers 7/2018, Bank of Finland, Institute for Economies in Transition.

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