Two decades after Korpi and Palme’s “paradox of redistribution”: What have we learned so far and where do we take it from here?

Abstract

Over two decades ago, Korpi and Palme (1998) published one of the most influential papers in the history of social policy discipline, in which they put forward a “paradox of redistribution”: the more countries target welfare resources exclusively at the poor, the less redistribution is actually achieved and the less income inequality and poverty are reduced. The current paper provides a state-of-the-art review of empirical research into that paradox. More specifically, we break down the paradox into seven core assumptions, which together form a causal chain running from institutional design to redistributive outcomes. For each causal assumption, we offer a comprehensive and critical review of the relevant empirical literature, also including a broader range of studies that do not aim to address Korpi and Palme’s paradox per se, but are nevertheless informative about it.

Similarities Between European and National Solidarity. An Empirical Thought Experiment About Attitudes Towards Redistribution

“…Historically, nation states have a long-standing institutional infrastructure to tackle redistribution among its citizens. National welfare state institutions have a myriad of strategies and a broad range of instruments to tackle inequality (Korpi and Palme 1998;Gugushvili and Laenen 2021;cf. Bergh 2005;Jacques and Noël 2018).…”

Are universal welfare policies really more popular than selective ones? A critical discussion of empirical research

“…According to Skocpol, the lack of sustained popular support is key to explaining these differences as the middle and non-poor workingclasses had no practical cause for agreeing to pay taxes for programs narrowly targeted at the poor families. The same argument underlies the famous "Paradox of Redistribution" theory developed by the Swedish authors, Korpi and Palme (1998), though their causal mechanism is more complex as it tries to explain cross-national variation in redistributive outcomes in advanced welfare states (see Gugushvili and Laenen, 2021). Similar to Skocpol, they argue that:…”

Building universal social protection systems for all: What role for targeting?

“…For example, Nelson (2004) presents empirical evidence that non-means-tested benefits lifted much larger proportions of people out of poverty. Gugushvili and Laenen (2021) likewise conclude that overall ‘universalist countries tend to have better redistributional outcomes’, while adding that targeting, however, seems to work best when embedded within the overall framework of universalism. The required balance between universalism and selectivism will inevitably vary across countries but in any context, it seems important that selective policies are not too narrowly targeted at the very poor.…”

“…There is a wide body of literature analysing whether welfare regimes that target benefits to people with low incomes produce better redistributive outcomes than welfare regimes grounded in universal approaches. While there is little, if any, evidence that poverty targeting produces more redistributive outcomes, the majority of studies seem to indicate that levels of inequality are lower in countries with universal approaches (Gugushvili and Laenen, 2021; Korpi and Palme, 2000). One explanation for this outcome is that more universalistic approaches are better able to mobilize support from the general public across all income levels and that, as a result, redistributive budgets are larger in countries where universal approaches prevail.…”