Coalitional Realignment and the Adoption of Non-Contributory Social Insurance Programs in Latin America
Forthcoming in Socio-Economic Review
43 Pages Posted: 8 Nov 2013
Date Written: November 7, 2013
What explains the recent rise in non-contributory social insurance programs in Latin America? Since the 1990s, Latin American countries have enacted significant social policy reforms that have supplemented contributory insurance policies with new or expanded non-contributory programs, financed by general tax revenues. We present a political explanation for this phenomenon, arguing that the process of deindustrialization, and especially the increased labour insecurity that it entails, has changed the mix of social insurance policies favored by different individuals in the income and employment distributions. A long-term increase in economic insecurity has increased the relative demand for tax-financed, rather than contribution-financed, social insurance. Elected officials, especially those in the recent ‘rise of the Left’ in Latin America, have proven eager to meet these demands. We find strong evidence for this argument using both cross-national data on non-contributory pension policy adoption and individual-level data on policy preferences.
Keywords: Social policy, Economic reform, Employment, Public pensions, Latin America
JEL Classification: G23, H55, J32
Suggested Citation: Suggested Citation