Twenty years after Korpi and Palme’s “paradox of redistribution”: what have we learned so far and where should we take it from here? SPSW Working Paper Series, No. CESO/SPSW/2019-01. Leuven: Centre for Sociological Research.
Abstract: Over two decades ago, Korpi and Palme (1998) published one of the most influential papers in the history of social policy discipline, in which they put forward a “paradox of redistribution”: the more countries target welfare resources exclusively at the poor, the less redistribution is actually achieved and the less income inequality and poverty are reduced. The current paper provides a state-of-the-art review of empirical research into that paradox. More specifically, we break down the paradox into seven core assumptions, which together form a causal chain running from institutional design to redistributive outcomes. For each causal assumption, we offer a comprehensive and critical review of the relevant empirical literature, also including a broader range of studies that do not aim to address Korpi and Palme’s paradox per se, but are nevertheless informative about it. Our main contribution is that we move beyond a simple test of the “end product” (i.e., Are universal systems more effective in reducing poverty and income inequality?) to a much more sophisticated examination of the underlying, in-between mechanisms of the paradox of redistribution. In doing so, we respond to Korpi and Palme’s call to “open the black box of causal processes assumed to mediate the effects from institutions to redistributive outcomes” (1998:673).