“For to all those who have, more will be given…” The Matthew effect and welfare politics

The “Matthew effect” denotes the phenomenon of accumulated advantage: those who have (power, capital, resources, fame, citations, etc.) get more, whereas those who have not get less. Welfare politics is not so different. Since the important works of scholars like Esping-Andersen, Evelyne Huber and John Stephens, or Kees van Kersbergen, we know that “social policy” is not always about helping the weak and the poor. Indeed, continental European welfare states – such as Germany, Switzerland, France or Austria – tend to provide social benefits that are proportional to people’s incomes. It’s called social insurance and it’s meant to stabilize social stratification. Hence, the patron saint of continental welfare states is certainly closer to Matthew than to Robin Hood, and this explains why the mere level of social spending is a pretty bad indicator of “redistribution”.

All this has been known for a while now, but what many do not realize is that the battle between Matthew and Robin Hood is very much alive in current West European welfare politics. Consider the reform of the Swiss unemployment insurance that was adopted a few weeks ago: benefit levels for the core workers with stable, well-insured jobs were left intact, whereas cutbacks were enacted in particular for the young, the elderly and for women re-entering the labor force. Matthew sends his regards.

This represents just an example of a current welfare reform trend that the literature calls “dualization”, meaning that generous social security and income protection is maintained for labor market insiders with stable, good jobs, whereas outsiders in atypical and unstable employment are relegated to means-tested safety nets, such as social assistance. Thereby, welfare states create two categories of (potential) beneficiaries: the core workers and the rest.

In a recent paper, Hanna Schwander and I have shown that continental European welfare states create deeper insider-outsider divides than the Nordic or the anglo-saxon welfare states. What is more, taxes and transfers in continental Europe are designed such that they not only reproduce, but even increase the gap between insider’s and outsiders’ incomes. In a different paper, we also found that these differences are reflected in the attitudes of insiders and outsiders towards welfare policies: insiders want more social insurance and outsiders want more redistribution. Both groups seem well aware of what they benefit most from. Hence, dualization may very well become a major conflict line in current distributional politics.

Two questions, however, are crucial in evaluating the importance of dualization for the distribution of resources and life chances in the countries of continental Europe. First, what level of benefits and services is provided for the outsiders? If outsiders rely on relatively generous safety nets, dualization must neither lead to increasing poverty levels nor to political conflict. Countries vary largely in the generosity they provide for the “losers” of post-industrial capitalism in terms of income and social investment. Second, what are the politics of dualization? Who do insiders and outsiders vote for? Who represents their interests in the policy-process and why? Both questions are obviously related: where welfare states create deep divides between insiders and outsiders, this divide is more likely to become a political conflict line structuring representation. And these patterns of representation in turn affect the distributive outcomes of current reforms.

The Swiss National Science Foundation has just decided to fund a new project Hanna Schwander and I will start in January to find answers to precisely these questions. By means of new data on incomes, electoral behavior and party positions, we want to shed light on the cross-national variation of insiders’ and outsiders’ economic situation and political representation. Thereby, we hope to understand better why the battle between Matthew and Robin ends so differently in different countries.

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