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Abstract:

We promote the argument that countries' economic structural interdependence based on trade relationships influence individual preferences for social policy programs. When a central trading partner raises barriers in the form of increased tolls and tariffs it will increase the perception of labor market vulnerability and economic risk. Subsequently, increased risk perception should fuel different demands for different types of social policy reforms. Labor market segmentation into formal and informal workers thereby moderates the impact of risk. Our analysis contains two steps: the impact of changing trade relationships on individual economic risk perception, and, subsequently, the effect of risk on social policy preferences. To investigate the first part of the argument, we use a vignette experiment that primes individuals about hazards of changes in current trade relationships between Mexico and the U.S.. Next, we analyze how risk perception influences social policy preferences and how far different redistribution coalitions arise. As workers embedded in notoriously permeable labor markets not only frequently switch the sector of employment, but also share households with a spouse who works e. g. in the informal sector, social policy preferences cannot be simply derived from income level. Using a conjoint experiment that models the trade-off between different social policies and different degrees of scope, level, and who pays for it, allows to study the effect of increased risk perception and employment sector on policy preferences in a more nuanced way. We study our argument with an experimental survey for the case of Mexico in 2018.