Social security for all? Job loss, household income and income inequality in different welfare regimes

Life course risks are generally considered to be the main drivers of stratification. The hypothesis is that the disadvantaged are more likely to experience such events, and once experienced, suffer more from their consequences, which might then lead to wider inequality. Alternatively, life course risks might not be a significant determinant of income inequality if the risks and penalties of such events are not socially stratified e.g. due to relevant incentives or compensation in different welfare regimes. In this paper, we empirically test and explain the relationship between job loss and income inequality in Denmark, Finland, Germany and the UK for 1991-2008. Our preliminary findings reveal limited influence of job loss on income inequality in all countries despite the significant gradient in the risk and penalty of job loss at the individual level. Main explanations for such null effects are the rarity and short-lived nature of the job loss event. At the individual level, however, income losses following a job loss are significant even for the post-government income (i.e. after taxes and transfers), which also varies across countries in line with the specific incentives and compensation provided by relevant welfare institutions.  

 

Selçuk Bedük1, Anette Fasang2, Susan Harkness3, Stefan Bastholm Andrade4, Zafer Büyükkeçeci5, Satu Helske6 & Aleksi Karhula7

1 University of Oxford,  2 Humboldt University,  3 University of Bristol,  4 The Danish Centre for Social Science Research (VIVE), 5 University of Cologne, 6 University of Turku, 7 University of Helsinki

 

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