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Table of contents

Previous established rules, policies, and practices do not disappear overnight and often only slowly evolve over time. Conversely, long-ago established institutions with little egalitarian content or intention, often end up, after the evolution of time, having egalitarian consequences. For example, Thelen shows how the German apprenticeship system began as an exclusive inegalitarian institution but evolved into an institution that enhanced social equality and working-class economic security. Institutions put in place decades ago may still matter to poverty today, and institutions put in place today might not matter until significant time has passed.

For instance, even if the Democratic Party controlled the U. It takes a long time to change labor laws that undermine unions, to expand or create new social policies, to implement those policies, and to change normative expectations about egalitarianism. Thus, institutionalists often critique power resources explanations for implying that each election represents an active struggle and pivotal event, and instead stress the noticeable stability of poverty and inequality.

Path dependency is the idea that previous institutions set states on a trajectory whereby only certain subsequent choices are possible or efficient.

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That is, current politics and institutions depend on the path a state has taken previously. To understand how institutions shape poverty, scholars therefore need a long-time horizon of cause and a long-time horizon of outcomes Pierson As a result, scholars tend to focus on cumulative and long-term effects that steadily build and gradually evolve over time and may only have impacts once a certain threshold has been met Huber and Stephens This lock-in is then difficult to overturn or undermine, and therefore poverty and inequality are almost predetermined by these institutions.

A weaker institutionalism proposes that previously established arrangements guide how, when, and why political actors can and do shape poverty Huber and Stephens ; Jensen Previously established rules and regulations constrain the choices available to actors, the subsequent political behavior of actors, and even the cultural interpretation of inequalities in society. Because institutions shape the expectations guiding and resources available to actors, they also have long and complicated causal chains that ultimately shape poverty Pierson Compared to research on power resources and collective actors, there is perhaps less research on how institutions affect poverty.

Therefore, even though institutional theories are highly relevant to and often lurk under the surface in poverty research, it is less common for scholars to explicitly highlight institutions. Still, salient research has been done on democracy, and electoral, labor market and educational institutions. Refining the power resources literature, scholars have shown that the effects of parties on poverty are more pronounced once democracy has become firmly established Huber and Stephens This is partly because stable democracies are more responsive and effective at channeling state resources toward reducing income inequality Jenkins and Scanlan ; Lee , partly because parties require significant time to maturely crystallize their positions on economic and social policies Huber and Stephens ; Resnick , and partly because weak or new democracies present few opportunities and channels for the political mobilization of the poor Heller Whereas authoritarian regimes can more easily repress the poor and workers, parties need to attract the poor and working class as constituencies in democracies Rueschemeyer et al.

The result of this is that while democracy might not have a simple and direct effect on poverty Ross , there is a complicated and historically cumulative influence of democracy through parties, other collective political actors, and mature states Huber and Stephens Therefore, democratic regimes ultimately matter to poverty by creating an environment in which power resources are likely to be more consequential.

Beyond the stability of electoral democracy, scholars in the past decade have stressed how particular institutions of electoral democracy matter to poverty and inequality Malesky et al. Especially central to the literature, Iversen and Soskice demonstrate with both a formal model and empirical evidence that proportional representation PR systems redistribute more than single-member district systems see also Persson and Tabellini They show that electoral systems influence the nature p.

They demonstrate that PR systems advantage center-Left governments, while majoritarian systems favor center-Right governments. Based on analyses of rich democracies, they show that electoral systems thus indirectly explain why PR countries in Europe have so much less poverty and inequality than majoritarian countries like the United States also Brady Scholars have shown that such veto points including e.

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There has also been research on how electoral institutions shape the political behavior of the poor. For instance, in a study of rich democracies, Anderson and Beramendi show that higher levels of partisan competition on the Left shape the tendencies of dominant Left parties to mobilize poor voters in response to inequality. They demonstrate that without the presence of several contending Left parties, dominant Left parties have little incentive to encourage poor people to vote.

This is relevant because the political behavior of the poor has some bearing on the collective actors shaping poverty, as discussed above. Therefore, electoral institutions like the presence of multiparty competition, which is more likely in a proportional representation system, are likely to indirectly affect poverty through the political behavior of the poor.

In terms of labor market institutions, an extensive literature investigates how corporatism and wage coordination affect inequality.

This literature has shown that earnings inequality is lower in corporatist labor markets that feature stricter employment protection e. As noted above varieties of capitalism scholars refer to such corporatist labor markets as coordinated market economies Hall and Soskice , as countries typically bundle several labor market institutions into a more or less coherent system. According to this literature, corporatism brings together business and labor into cooperative and long-term-oriented relationships that bring about greater equality Hicks This literature has influenced the aforementioned literature on working poverty.

Indeed, low-wage work and working poverty appear to be less common in labor markets featuring such institutions Brady et al.

Welfare state

Because low-wage work is so salient to working poverty and therefore poverty overall, it follows that this literature on labor market institutions is relevant to poverty research. Many of the countries that have extensive labor market institutions like corporatism also tend to have vocational education systems, and scholars have pointed out the strong complementarities between the two Hall and Soskice Germany is often held up as the model because it has historically had well-developed bridges between schools, vocational training, and apprenticeships. Such vocational systems have been linked to lower poverty and inequality Allmendinger and Leibfried ; Moller et al.

The reason is that vocational education represents a better pathway to work for those who do not get a college degree. So, while workers with college degrees are advantaged almost everywhere, the penalty for lacking a college degree is lessened if one has vocational training. As a pathway for young people who do not go to college, scholars in the United Kingdom and the United States have proposed the establishment of such vocational education systems to reduce unemployment, labor market precariousness, and even poverty Rosenbaum By contrast, others argue it is more important to reduce educational inequalities in general and to raise education overall rather than develop tracks for different groups of students in order to alleviate poverty Solga Finally, one promising direction for poverty research on institutions is the study of international institutions.

International institutions, like the European Union, have been linked with government spending and the welfare state Brady and Lee ; Ferrera and with income inequality Beckfield A few have connected international institutions to poverty e. For example, Easterly shows that International Monetary Fund and World Bank structural adjustment programs aimed at developing countries reduced the effectiveness of economic growth in reducing poverty. Moreover, international institutions have arguably become more salient in recent decades and may become even more so in the future.

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Thus, it is plausible that international institutions will be increasingly relevant to poverty. Regardless of where scholars sit on the continuum of power resources and institutions, most agree the state plays a pivotal role in shaping poverty. The conventional approach views the state as a mediating variable, such that power resources and institutions often have indirect effects on poverty through the state.

According to this approach, power resources and institutions influence the size, practices, and policies of the state, and the state implements egalitarianism. As we discuss later, much research demonstrates how social policy benefits the poor and reduces poverty Brady ; Brady et al.

Relatively less scholarship highlights how state policies can also be harmful to the poor. On some level, one could include the entire fields of public and social policy research as relevant to this essay. Rather than summarizing all scholarship on state policy, we distill the literature into a parsimonious typology of how states matter. We identify a set of generic mechanisms for how state policies matter to poverty. Enumerating these mechanisms should facilitate and guide scholarship on the range of roles that states play, and comprehensively evaluating those roles allows us to better understand how states shape poverty.

First, state policies organize the distribution of resources Moller et al. Typically, this mechanism is presented as redistribution. However, state policies more realistically organize the distribution of resources by influencing how resources are distributed in the market and after the market Bradley et al. Through taxation, transfers, and services, social policies take resources from one part of the population and distribute to others or to the same population at different stages of life.

Yet, state policies also shape how much people earn and how much investments return. The obvious example of state policies that shape earnings are minimum wage laws, but household income is contingent on a range of policies states have for coercing private and public actors in markets.

Hence, state policies both redistribute and distribute, and a narrow focus on redistribution underappreciates the full set of consequences of state policy. Second, state policies insure against risks DiPrete Many social policies are insurance programs against unexpected e.

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Moreover, because the private sector is often unlikely to insure p. States often go further than just insuring against risks but also are actively involved in preventing risks through regulation. For instance, states can reduce workplace injuries, and this enhances the earning power of workers.

Thus, state policies both reduce the likelihood of poverty-inducing events and mitigate the consequences when such events occur DiPrete Third, states invest in capabilities. States educate, train, care for, and keep healthy their residents.


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States also often feed and house their residents, though it is probably mostly through education, training, care, and health care that states contribute to the well-being and development of their populations. Similarly, this role has long been studied as part of the literature on aid and assistance to developing countries Feeney and McGillivray this volume.

Fourth, and closely related to the third point, state policies allocate opportunities. In addition to preparing people for jobs and caring for people when they cannot work, states actually create jobs and other opportunities. States are often the largest employers in their countries, and public employment is especially relevant to poverty during economic recessions.

Though service obviously comes with great potential costs, the military has also been a key state policy that has been a source of social mobility out of poverty and a basis for economic development for relatively impoverished communities Sampson and Laub States also allocate these opportunities in more or less equal ways, and this often has consequences for poverty. For example, the aforementioned investments in capabilities such as education and training are often distributed unevenly, and if they were distributed more equally, less poverty would likely result.

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Fifth, state policies socialize expectations Brady State policies are clearly shaped by the politics of collective actors and widely held beliefs. However, since at least the early s, scholars have stressed how state policies feed back into public opinion and politics Brady and Bostic ; Fernandez and Jaime-Castillo ; Huber and Stephens ; Skocpol By explaining how state policies construct interests, ideologies, and coalitions, compelling research has shown how state policies shape norms, beliefs, and the subsequent politics of state policies Brooks and Manza ; Korpi and Palme ; Pierson If those feedback effects are positive, there will tend to be increasing public support for policies, and when those policies are effective, poverty reduction will be reinforced and social equality becomes more institutionalized.

Hence, state policies shape the popular expectations about whether poverty is just or necessary, and these likely shape the amount of poverty in society Brady Sixth, states discipline the poor Soss et al. The state punishes, warehouses, polices, monitors, stigmatizes, constrains, undermines and limits the freedom of the poor and certain populations. These many processes fit under the broad banner of disciplining the poor Soss et al. While Piven and Cloward emphasized how welfare was used to control and force the poor to work, states today may emphasize punishment and warehousing more because there is not enough well-paid work to sustain the poor Wacquant Further, in Piven and Cloward and recent work like Soss and colleagues , the state has often actively sought to paternalistically manage the fertility, partnering, and parenting behavior of the poor.

Incarceration worsens poverty through multiple channels DeFina and Hannon ; Western and Muller Directly, ex-prisoners face substantial disadvantages in the labor market Western Indirectly, the families of prisoners face severe strain, and there is evidence that increasing incarceration has concentrated childhood disadvantages Wildeman and even increased child homelessness Wildeman Though dramatically increasing incarceration has clearly been a significant policy intervention that has worsened inequality, it is important to keep in mind there are many other and less studied ways that states discipline select groups in ways that worsen poverty.

Capitalism, Democracy, and Welfare. Cambridge Studies in Comparative Politics

In sum, we have identified at least six generic mechanisms linking state policies and poverty. By creating this typology of mechanisms, we aim to clarify the themes in past research and guide future research on state policy effects on poverty. In total, great progress has been made in the study of how politics and institutions shape poverty and inequality. Scholars have advanced sophisticated theoretical arguments, and considerable empirical evidence has been accumulated. More than perhaps at any point in the social science of poverty, political and institutional explanations have proven valuable for understanding poverty.

Animated often by power resources and institutional theories, scholars have shown the salient impacts on poverty of labor unions, Left parties, elites and business, democracy, electoral systems, and labor market and educational institutions. Nevertheless, despite the progress in the literature, the literature is presently grappling with several challenges and dilemmas.

Some challenges are methodological, others are theoretical, and others are simply the result that the world keeps changing in ways that often defy our accounts. There are at least two pressing dilemmas for the power resources literature. First, even though the existence of power resources representing the disadvantaged are clearly to the benefit and interests of the disadvantaged, such power resources are struggling to survive.

Unions, Left parties, and other Left collective actors face significant challenges of solidarity and mobilization and are experiencing declines in their memberships and affiliations. For instance, even though there continues to be stable differences in unionization across rich democracies, unionization is declining in almost every rich democracy Pinto and Beckfield For political parties and voting, there is also evidence of a weakening loyalty of working-class voters to Left parties e.

Such declines raise the question of why power resources are declining even though they continue to benefit the poor and working class. One answer is that these power resources face the same coordination and mobilization problems that any group faces. There are always free riders, and perhaps the reality is that successfully mobilizing the poor, working class, or anyone is the exception rather than the rule. In turn, maybe we should consider the sustained effective mobilization of power resources in the post—World War II era as partly the product of a unique historical period.

If that era truly was unique, we need to revise power resources theory to better incorporate factors like historical contingency and global political economy. What that would mean for the core ideas of power resources theory remains unclear.

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A second answer is that poverty and inequality themselves undermine political mobilization. So, there could be feedback effects whereby rising inequality undermines power resources, and some of the observed relationship between power resources and lower poverty may have been the artifact of reverse causality. Indeed, Solt shows inequality depresses political interest, the frequency of political discussion, and participation in elections among non-rich citizens also Schaefer Anderson and Beramendi find that the poor are less likely to vote where economic inequality is higher.

After all, rising inequality should greatly increase the material interests of the poor and working class in supporting power resources for welfare states and egalitarianism.