Other-regarding and insurance motives in demand for redistribution: an empirical analysis

What drives demand for redistribution? In this paper we empirically test for the presence of altruistic and insurance motivations underlying demand for redistribution. We consider redistribution in the form of unemployment benefits and estimate how changes in the local unemployment rate affect expressed demand for unemployment benefits by the employed. Using a newly constructed data set from Spain, we find evidence that the expressed demand for unemployment benefits by workers with little to no risk of becoming unemployed themselves does not respond to changes in the local unemployment rate. However, the expressed demand for such benefits by the workers who do face significant a risk unemployment does exhibit sensitivity to changes in the unemployment rate. These results suggest that preferences for redistribution in the form of unemployment benefits are driven by insurance considerations rather than by any form of other-regarding preferences.