Who supports social policy in the developing world? Most of what we know about micro-level preferences for social policy comes from well-developed, wealthy countries of the OECD, where governments can credibly commit to policy enforcement and implementation. My work contributes to this literature by questioning an oft unstated assumption: today’s contributions lead to the legally prescribed benefits tomorrow. While fiscal challenges have been explored, I focus on institutional challenges prevalent in the developing world, where weak rule of law and the poor quality of governance allow social policy to be subverted. The research has important implications for our understanding of the welfare state, particularly who supports it and the types of policies promoted in different settings. It also has important implications for our understanding of political and economic development. Under optimal conditions social policy encourages investment in skill and provides a vital safety net. This spurs economic development. Under less optimal conditions it is a tool for buying political support, providing tools for politicians to maintain power. Understanding the micro-foundations of social policy is therefore critical to understanding trade-offs between the economic and political concerns of politicians.
My dissertation identifies four pathologies of weak institutions affecting support for social policy: rampant misappropriation, weak contract enforcement, free-riding, and macro-economic risk. Drawing on institutional economics, I develop a theory of how these shape the preferences of individuals and firms over various types of social policy programs. Existing work treats poor institutions as a drain, which saps benefits and support. Instead, I argue that poor institutions generate winners, as well as losers. Two groups specifically – the politically well-connected and those with low visibility to the state – can manipulate weak institutions to make social policy less costly and more appealing. This has important implications for the composition of coalitions involved in social policy reform, the concerns that animate them, and policy-making more broadly.
I test my argument using evidence drawn from the post-communist states and a mixed-methods approach. Using surveys of 28,000 individuals in 28 post-communist countries and 666 Russian firms, I find little evidence that institutions directly affect preferences but strong support for a conditional relationship. Individuals and firms with low visibility to the state are more likely to support social policy where weak institutions enable rampant tax evasion. For firms, I also show that political connections predict support for social policy where institutions are weak. To further build confidence, I analyze qualitative evidence drawn from content analysis of articles in 352 Russian newspapers during recent pension reforms, showing that concerns about institutional quality were central to debates. Finally, I ran an original survey experiment to examine the mechanisms linking institutions and popular preferences, although the results are mixed. Overall, my work suggests that weak institutions create opportunities that generate unexpected sources of support for social policy among those who can abuse them to shift or mitigate costs. My work speaks to scholars of comparative politics (particularly the welfare state), comparative political economy, institutional economics, and business-state relations.