The Political Economy of Compensatory Redistribution: Unemployment, inequality and policy choice
Résumé
This paper explores common trends in inequality and redistribution
across OECD countries from the late 1980s to 2013. Low-end inequality
rises during economic downturns while rising top-end inequality
is associated with economic growth. Most countries retreated
from redistribution from the mid-1990s until the onset of the Great
Recession and compensatory redistribution in response to rising unemployment
was weaker in 2008-13 than in the first half of the
1990s. As unemployment and poverty risk became increasingly concentrated
among workers with low education, middle-income opinion
has become more permissive of cuts in unemployment insurance generosity
and income assistance to the poor. At constant generosity, the
expansion of more precarious forms of employment reduces compensatory
redistribution during downturns because temporary employees
do not have the same access to unemployment benefits as permanent
employees.
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