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An asset theory of social preferences

By Torben Iversen and David Soskice

Abstract

We present a theory of social policy preferences that emphasizes the composition of peopleÕs skills. The key to our argument is that individuals who have made risky investments in skills will demand insurance against the possible future loss of income from those investments. Because the transferability of skills is inversely related to their specificity, workers with specific skills face a potentially long spell of unemployment or a significant decline in income in the event of job loss. Workers deriving most of their income from specific skills therefore have strong incentives to support social policies that protect them against such uncertainty. This is not the case for general skills workers, for whom the costs of social protection weigh more prominently. We test the theory on public opinion data for eleven advanced democracies and suggest how differences in educational systems can help explain cross-national differences in the level of social protection

Topics: JC Political theory
Publisher: Cambridge University Press for the American Political Science Association
Year: 2001
OAI identifier: oai:eprints.lse.ac.uk:15406
Provided by: LSE Research Online
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