Borrowing Welfare: Credit Access and Support for Redistribution

  • Previous scholarship has noted the incentives that governments face to promote private access to credit to substitute for reductions in publicly-provided welfare. While this research offers theoretical arguments and empirical evidence linking political decisions to credit growth (supply side of credit expansion), it is not obvious that voters see credit as a perfect substitute for welfare policies (demand side). We look into the demand side of credit expansion and test whether individuals with better access to credit indeed express lower demand for redistribution, which would be consistent with this view. Based on data from five waves of the European Social Survey (2002–2010) for 23 European countries, and controlling for unquestionable confounders (e.g. income), we find evidence that expanded access to credit attenuates demands for redistribution, but we also see that the size of this effect varies considerably, and is even null in some countries. We find that the effect size largely depends on both the country-year’s level and structure of inequality, a set of findings that we attribute to differential incentives that middle-class individuals face. Hence, voters do not always see credit as a substitute for welfare; the economic and social context in which they live matters.

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Metadaten
Document Type:Working Paper
Language:English
Author(s):Jonas Markgraf, Guillermo Rosas, Sebastian Lavezello
Publication year:2019
Publishing Institution:Hertie School
Related URL:https://emagar.github.io/pdfs/markgrafRosas2019.pdf
Release Date:2020/05/20
Hertie School Research:Publications PhD Researchers
Licence of document (German):Metadaten / metadata
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