Policy feedback and income targeting in the welfare state

Abstract

In light of ongoing debates about income targeting in the welfare state, this article explores how the design and outcomes of income targeting policies are related to popular targeting preferences. Based on the unique combination of fine-grained opinion and policy indicators in a multilevel analysis, the results show that targeting preferences are indeed empirically related to targeting policies. However, whether these preferences are affected more by the de jure targeting design or the de facto targeting outcome seems to vary between two very different policy domains. In the case of unemployment benefits, the results suggest positive policy feedback: support for high-income targeting increases when unemployment benefits are designed to benefit those with previously higher incomes. For income taxation, by contrast, the results suggest negative policy feedback. In that case, it is not so much the de jure design but rather the de facto outcome that matters: the more taxes effectively work to the advantage of higher-income earners, the less support there is for a tax that levies the same amount on everyone, regardless of income.