How Do Policy Preferences Change by Risk Perception and Unemployment Shock?

• In Event: Poster Session: Political Economy

Abstract

How much do voters support the welfare state? Under what conditions do voters become more supportive of redistribution? While current income level and perception of risk are both widely studied for cross-sectional comparison, how changes in economic standing interact with risk perception is relatively less explained. Building on the insight from the rational expectation hypothesis, I contend that voters interpret their job loss differently depending on whether it is expected or not. Employing the Swiss Household Panel (SHP) data, I find that becoming unemployed increases the workers’ taste for redistribution. However, I also find that the effect is bigger when individuals perceive a low level of risk ex-ante.

Author

• Jiyeong Jeon, Texas A&M University