- Volume 59 Issue 4
In this article, I want to demonstrate wage equality increases support for welfare expenditures while the wage equality depends on how labour market institutions are organized. In other words, this study tries to show that there can be institutional complementarity between inequality-reducing labour market institutions and generous social policy. In the first section, I develop a theoretical models which deal(1) how the inequality of income affects the political support for welfare expenditure(2) how the configurations of labour market institutions affect income inequality in the labour market. In the following section, this study tests the models with data on welfare spending, configurations of labour market institutions, and the inequality of wage and salaries in 14 welfare states from 1980 to 1995. Empirical analysis also provides support for key implications of the models. These models and empirical findings may show that the institutional complementarity stems from the interdependence of institutional influences on actors' decision-making. Moreover, this study suggests welfare policy are always considered with labour market institutions.
institutional complementarity;labour market institutions;median voter;wage inequality;social policy