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ABSTRACTThe informal sector challenges economic growth and hinders the abatement of income disparities in developing countries. This study argues that a weak and poorly governed welfare state can cause the informal sector to increase when individuals use it as an exit option from an unsatisfying welfare system. The article explores how the welfare state's benefit structure and citizens' trust in institutions to deliver public goods affect the likelihood of informality. A logistic hierarchical model, based on cross-sectional survey data from Latin America and the Caribbean and descriptive panel data from Brazil, is used to test the hypothesis. Findings reveal that social policy discontent, low trust, an elitist distribution of welfare benefits, and dysfunctional institutions increase the likelihood of being informally employed. However, workers with greater agency—the better-educated—seem notably less likely to informalize when social policy benefits are targeted toward their own socioeconomic group.

Foreign assistance constitutes a significant share of government revenue in many low- and middle-income economies and is targeted at poverty reduction and the promotion of social and economic well-being. This study therefore examines fiscal responses by Latin American welfare states to the inflow of such aid. As a form of external non-tax revenue, aid can function as a substitution for public welfare expenditure, with a crowding out effect being the likely outcome. This article investigates whether overall aid and aid that is particularly targeted at the social sector substitutes public welfare provision and, if so, whether it also substitutes its function. A time-series cross-section analysis of 19 Latin American countries for the period 1980-2008 provides limited support for the assumption that foreign aid payments influence the welfare budget. It is only the health care sector in middle-income countries which experiences a small decrease in expenditures. Social security and education expenditures are not affected.

This study investigates the extent to which labor market dualization polarizes preferences on redistribution between formal and informal sector workers in Latin America and the Caribbean. Differences in welfare state costs and benefits for these labor market groups are likely to fuel diverging incentives regarding welfare consumption. The article tests whether or not informal workers are driven mainly by economic self-interest to increase gains from public welfare goods. The study employed a hierarchical model on pooled survey data from the Latin American Public Opinion Project (LAPOP) 2008 and 2010 to analyze the risk exposure of formal and informal workers and, subsequently, their preferences on redistribution. The analysis reveals that while economic self-interest is an influential factor for formal workers, it is (unexpectedly) much less so for informal workers. Also, an increased economically insecure environment, reflected by high unemployment rates, does not motivate informal workers to an exceptional degree to turn towards the state for redistribution, despite greater exposure to economic risk. Labor market dualization does not translate into polarization at the individual level regarding redistributive preferences in Latin America and the Caribbean. (JPLA)

AbstractForeign assistance constitutes a significant share of government revenue in many low‐ and middle‐income economies and is targeted at poverty reduction and the promotion of social and economic well‐being. This study therefore examines fiscal responses by Latin American welfare states to the inflow of such aid. As a form of external non‐tax revenue, aid can function as a substitution for public welfare expenditure, with a crowding out effect being the likely outcome. This article investigates whether overall aid and aid that is particularly targeted at the social sector substitutes public welfare provision and, if so, whether it also substitutes its function. A time‐series cross‐section analysis of 19 Latin American countries for the period 1980–2008 provides limited support for the assumption that foreign aid payments influence the welfare budget. It is only the health care sector in middle‐income countries which experiences a small decrease in expenditures. Social security and education expenditures are not affected.

The provision of welfare services can be understood as an iterated public goods game in simplified terms. Individuals contribute via taxation while the state cooperates by the provision of welfare services as return for paid contributions. Focusing on welfare provision in low- and middle-income democracies, where we find decisive variation in state capacity and considerable inefficiencies such as high rates of income inequality, corruption, and a prosperous informal economy, the efficiency of the public goods game becomes uncertain. If the state is perceived as weak and untrustworthy because of lacking capacity to extract revenue and to deliver social services, why should individuals turn towards this low-capacity entity for provision of welfare services? Drawing upon the current debate on redistributive preferences in the political economy literature, the overall research question that this dissertation is concerned with therefore asks: what happens to individual social policy preferences when the context of high-income states dissolves? The dissertation analyses social policy preference formation in the context of increased uncertainty that is reflected by weaknesses in the distributive and extractive capacities of the state and inefficiency – that is, the informal economy. Based on cross-country survey data for a large set of less developed democracies, the study illustrates with the use of hierarchical modeling techniques how context characteristics influence individual preferences, next to micro level factors such as income, education, and labor market status. The analyses reveal a considerable impact of these key features of the public goods game for social policy preferences in low- and middle-income democracies. The dissertation builds a micro-foundation for social policy in low- and middle-income democracies that takes into account the institutional and structural framework of the state and the particularities of a stratified labor market.

One of the most prominent political-economic arguments is that heterogeneity undermines support for public goods and redistribution. Past research, however, has been mostly cross-sectional, used weak measures of heterogeneity, under-studied Latin America, and did not examine the multiple bases of heterogeneity. We assess negative (fractionalization and between-group inequality [BGI]) and positive (compensation) hypotheses with time-varying measures of ethnic, linguistic, and religious heterogeneity. We analyze four different preferences using up to six survey waves with over 200,000 Americas Barometer respondents across 24 Latin American and Caribbean countries. We estimate both fixed-effects models focusing on within-country variation and multilevel models focusing on between-country variation. Regardless of estimation technique, the prevailing pattern is statistical insignificance for both heterogeneity and BGI coefficients. The results largely contradict the fractionalization hypothesis, as only four of the 108 relevant heterogeneity coefficients are significantly negative. There is slightly more support for the BGI hypothesis, and especially ethnic BGI. Still, most BGI coefficients are insignificant and linguistic BGI is significantly positive in most models. The compensation hypothesis receives more support, as almost half of the heterogeneity coefficients are significantly positive. We conclude by cautioning against universal claims that heterogeneity undermines support for public goods and redistribution.

Despite globalization's distributional impacts, we know little about (potentially differential) tax preferences of trade winners and losers, especially within social classes. We assess tax burden preferences to sustain public good provision using a vignette experiment with randomized tax instruments in the context of a liberalizing economy. More specifically, we analyze data from an original, randomized household survey of 1008 individuals in Sao Paulo State, Brazil, in 2019. We study preferences for increases in personal income, value-added, or corporate income taxes to improve funding for the universal health care system after Brazil adopts its free trade deal with the European Union. Findings reveal that the trade-losing poor support progressive taxes, whereas the trade-winning poor favor regressive instruments. By dividing the poor, globalization may create a barrier against more progressive fiscal strategies in emerging economies.

Much of the literature on victimization looks at the effect of organized violence (OV) on civilian perceptions and behaviour. Yet citizens in countries experience quotidian crime (QC) on a daily basis. QC differs from OV, the former being more isolated, while the latter is more of a collective experience. As such we develop a theoretical framework that explores the effects of both types of violence on preferences for public goods. Victims of OV may prefer welfare public goods for the entire community, whereas victims of QC may prefer security for themselves. We also test the effects of compound victimization on public goods' preferences. We use original survey data from rural Liberia to test our hypotheses and find support for our argument. Our results show the importance of a disaggregated approach to understanding the effects of violence on preferences.

Middle-income countries experience various types of migration: transients, emigrants, refugees, and returnees. Their domestic economy is especially influenced by refugees and returnees. Since returnees and refugees vary in access to social policy programs and in skill composition, different types of migration should vary in "threat potential" for social policy demands, with the low-skilled responding more negatively to refugees, while the high-skilled face greater competition from returning natives. We test our argument with original survey data from Mexico, distinguishing respondents' concerns about two distinct streams of migration: Central Americans seeking refuge in Mexico and Mexicans returning from living in the United States. Surprisingly, we find that the low-skilled's welfare preferences suffer neither type of migration concern, whereas high-skilled Mexicans oppose expanding social welfare when concern about returnees is high. Social solidarity in the welfare state is most depressed by returning natives.