Risk Pools and Social Policy Adoption

Abstract

Within a few decades, every rich democracy adopted social policy programs to cover all main risks (old age, health, accident, and unemployment), a remarkable transition “from poor house[s] to welfare states” (Alber 1982). The specifics of these roughly 100 or so programs (23 rich democracies times 4 risks) vary widely, as do their conception, birth, and maturation (Alber 1981; Carroll 1999; Flora and Alber 1981). The complex history of social policies cannot be reduced to simple models of their development, and it is easy to point out specific examples that contradict existing generalizations of welfare state politics: industrialization nurtured social policy development, but a late-industrializing nation was the first to adopt social insurance programs (Germany); left parties and unions were often supportive of social policy development, but sometimes vigorously opposed it; it was often liberal, not social democratic, parties that initiated social policy legislation; employers often opposed the welfare state, but were sometimes instrumental in advancing it; and so on. The diversity of unemployment insurance (UI) systems, and the diversity of opinions toward these systems, are well documented in a report prepared by Hugh S. Hanna of the U.S. Bureau of Labor Statistics. The report provides a description of all “unemployment-insurance systems in effect in the 18 countries which … had adopted such systems up to May, 1931. The descriptive reports for these countries were prepared by the consular representatives of the United States Department of State in the several countries concerned, in accordance with an outline and a memorandum of instructions prepared by the Bureau of Labor Statistics” (Hanna 1931, 1). One particularly useful aspect of these reports is that they include, for many countries, “a statement of the attitude of representative individuals and organizations toward the system” (Hanna 1931, 178). The reports prepared by the Bureau of Labor Statistics reveal that (in 1931) in some countries, the (voluntary or mandatory) UI system enjoyed general support from employers, employees, and the public (Ireland, Italy, Belgium, Netherlands) while in other countries, no group was enthusiastic about the system (Czechoslovakia). In various cases, employers were initially opposed to (specifics of) the unemployment system (Austria, Bulgaria, Germany, others), while employees supported it.