Political Support for Targeted versus Universalistic Welfare Policies
This paper compares the political support for a targeted and a universalistic welfare policy in a model in which incomes are stochastic (so that welfare policies have an insurance benefit) and unequal ex ante (so that welfare policies have a redistributive effect). With self-interested voting, low benefits may so reduce the probability of receiving benefits for the majority that the majority prefers to reduce benefits even further to zero. In contrast, a majority of self-interested voters always supports positive welfare benefits when the policy is universalistic. If voters are somewhat altruistic, the difference between the equilibrium level of benefits with a universalistic and targeted policy diminishes.
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