Political
Support for Targeted versus Universalistic Welfare Policies
Karl
Ove Moene and Michael Wallerstein
Abstract
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.
Karl Ove Moene, Department
of Economics, University of Oslo Michael Wallerstein, Department of Political Science,
Northwestern University
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