Economic Crisis: Toward the Erosion or Stability in Individual Welfare State Preferences?

Friday, July 18, 2014: 11:45 AM
Room: F203
Distributed Paper
Ariel YOUNG , Department of Government, Uppsala University, Uppsala, Sweden
Understanding voter preferences for the welfare state and how they are formed has become an important basis for making claims about either the erosion or continued stability of the welfare state.

In the past decade evidence has mounted to point towards a relationship between individual measures of economic hardship/risk and support for the welfare state. However, most of the research has been constrained to limited time-series data that evaluates this relationship under relatively stable business cycles which seldom affects individuals belonging to more secure economic groups (high skill, high income). In light of the increasing global economic instability that places these individuals at greater risk, it becomes important to determine if they will respond differently and change the direction of aggregate support for the welfare state.

This paper will examine in detail how different class groups respond to increasing risk, in particular more economically secure groups, and identify if recent findings of increased aggregate support as well as class convergence in Sweden hold or if they resemble a recent study that demonstrated a decline in welfare state support in the United States following the 2008 economic crisis.

The leverage of this study is based on the use of (1) exogenous properties of the 2008 economic crisis, (2) a Swedish survey that reflects respondents’ welfare state preferences and socio-economic attributes that spans seven consecutive years sampling approximately 3000 respondents per round, and (3) a design which employs a difference-in-differences method to compare individuals across municipalities. Municipalities are sorted according to those that experienced an immediate substantive spike in unemployment and those that experienced little change, which resembles a treatment and control group respectively. This design reduces endogeneity to make stronger claims for causality, improves estimation of increased economic risk on more economically secure groups, and consequently overall changes in public preferences.