Redefining Who's 'In' and Who's 'Out' : Explaining Preferences for Redistribution in Bolivia

How does welfare state expansion reconfigure political coalitions? Traditional accounts of the welfare state in advanced industrial economies emphasize the tendency for policy “insiders” -- those already incorporated in social insurance systems -- to resist further expansions since this would dilute their share of benefits, while “outsiders” support increases in social insurance coverage. However, this paper argues that preferences regarding social insurance are instead the product of two other coalition-forming factors, and that these can produce broad-based support for policy expansion in developing and middle-income countries. First, where the informal economy dominates the labor market, formal “insiders” may be particularly sensitive to the risk of job loss or temporary unemployment or informal employment; they thus have less confidence in their long-term ability to find security in contributory insurance schemes, and they are willing to make common cause with policy outsiders in supporting expansion. Second, given the complexity of social insurance schemes, especially in low-information environments, political partisanship provides strong cues to individual citizens about how to evaluate competing policy options. Parties can use these cues to swing opinion toward new redistributive policies that would expand their political base.This paper tests these hypotheses in two ways in the context of Bolivia. First, it examines three key social insurance configurations in Bolivia over the last thirty years, analyzing the preferences and coalitions that supported each system. Second it uses an original survey carried out in Bolivia following that nation's 2007 extension of a noncontributory national minimum pension. It shows that citizens formed their preferences in favor of expansion based on their perception of labor market risk, particularly as they compared the current state of the economy to that of a year before. To the extent that insiders opposed the expanded pensions, they were most sensitive to the issue of how inclusion of the outsiders would affect their benefit stream. Finally, the paper shows that partisanship -- proxied by support for Evo Morales' MAS party and his government -- was strongly related with support for the introduction of the national minimum pension