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Social Risk and Social Insurance

Author

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  • Wonik Kim

    (Department of Political Science, 240 Stubbs Hall, Louisiana State University, Baton Rouge, LA 70803, USA, wkim@lsu.edu)

Abstract

This article analyzes the political support for social insurance, providing micro-foundations of how rational workers demand social protection. Existing studies have focused on the importance of income inequality in the form of redistributive and income effects. Yet they have largely ignored the protective effect stemming from the distribution of risks within society. Using unemployment insurance, I argue that the political demand for unemployment insurance depends on the distribution of risk as well as income in a society. A multiplicative interaction model is employed to test the joint effects of income and risk inequality on replacement rates of unemployment insurance. The empirical evidence shows that: 1) the risk of losing one's job differs significantly across the economic sectors in which people are employed, 2) the impact of risk inequality is positive unless there is excessively high income inequality, and 3) the relationship between income inequality and unemployment benefits is also conditional upon risk inequality.

Suggested Citation

  • Wonik Kim, 2007. "Social Risk and Social Insurance," Rationality and Society, , vol. 19(2), pages 229-254, May.
    • Handle: RePEc:sae:ratsoc:v:19:y:2007:i:2:p:229-254
    DOI: 10.1177/1043463107077388
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    References listed on IDEAS

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    Cited by:

    1. Kim, Wonik, 2008. "Enfranchisement and the welfare state: Institutional design of unemployment compensation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1660-1678, August.
    2. Sarah Brockhoff & Stéphane Rossignol & Emmanuelle Taugourdeau, 2012. "The three worlds of welfare capitalism revisited," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00679066, HAL.
    3. Baptiste Françon & Michaël Zemmour, 2013. "What shapes the generosity of short- and long-term benefits? A political economy approach," Post-Print halshs-00821083, HAL.
    4. Baptiste Françon & Michaël Zemmour, 2013. "What shapes the generosity of short- and long-term benefits? A political economy approach," Documents de travail du Centre d'Economie de la Sorbonne 13027, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Thompson Fred & Rizova Polly, 2015. "How Government Creates Value?," Economic Themes, Sciendo, vol. 53(4), pages 449-466, December.

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