MOENE, Karl Ove <br/><br/>
Inequality ,social insurance, and redistribution 

 -  2001 
<br/><br/> Is the political support for welfare policy higher or lower in less efalitarian societies? We answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner. When voters have both redistribuytive and insurance motives for supporting welfare spending, the effect of inequality depends on how benefits are target. Greate inquality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those withour earnings. With endogenaous targeting, support for benefits to those without earning declines as inquality increases, whereas support for agregate spending is a V-shaped function of inequality. Statistical analysis of welfare expenditures in advanced industrional societies provides support for key empirical implications of the model