This article examines how the informal sector, as a group of potential 'free riders' for public welfare goods, relates to individual social policy preferences in low-and middle-income countries. The exclusion hypothesis proposes that a large informal sector lowers the preferences from formal workers and the middle-and high-income groups for social services to be provided by the state, and raises these groups' preferences for public welfare goods to become club goods. In contrast, the prospect hypothesis argues that formal workers, particularly the middle-income group, ally themselves to the informal sector to insure against the risk of future employment in informality. The study examines individual preferences for the provision of pensions and health care by either the state or private enterprises. The two competing hypotheses are tested with a hierarchical model using survey data from Latin America for 1995, 1998 and 2008. The findings offer support for the exclusion hypothesis.

When do high-income earners get 'on board' with the fiscal contract and accept paying a larger share of the tax burden? Progressive taxes perform particularly poorly in developing countries. We argue that the common opposition of the affluent to more progressive taxation is not merely connected to administrative limitations to coercively enforce compliance, but also to the uncertainty that high-income earners associate with the returns to taxes. Because coercion is not an option, there is a need to convince high-income earners to 'invest' in the public system via taxes. Trust in institutions is decisive for the fiscal contract. Expecting that paid contributions will be used in a sensible manner, high-income earners will be more supportive of progressive income taxation. We study tax composition preferences of a cross-section of Latin American countries using public opinion data from LAPOP for 2012. Findings reveal that higher levels of trust in political institutions strongly mitigate the opposition of the affluent towards more progressive taxation.

Recent research indicates that while higher tax levels are politically unpopular, greater tax progressivity is not. However, there remain unanswered questions regarding public support for more progressive taxation. In particular, little is known about how individual attitudes towards tax progressivity are affected by their institutional context. Building on existing theories of redistribution, this article develops the argument that the structure of the welfare state shapes public attitudes towards progressive taxation—support for progressive taxation among both average and high-income households is undermined by ‘pro-poor’ welfare spending. We support our argument with a cross-sectional analysis of rich democracies, interacting household income with country-level indicators of welfare state structure. In doing so, we contribute a micro-level explanation for the paradoxical macro-level phenomenon that larger, more redistributive welfare states tend to be financed by less progressive tax systems.

This study investigates the extent to which labor market dualization polarizes preferences on redistribution between formal and informal sector workers in Latin America and the Caribbean. Differences in welfare state costs and benefits for these labor market groups are likely to fuel diverging incentives regarding welfare consumption. The article tests whether or not informal workers are driven mainly by economic self-interest to increase gains from public welfare goods. The study employed a hierarchical model on pooled survey data from the Latin American Public Opinion Project (LAPOP) 2008 and 2010 to analyze the risk exposure of formal and informal workers and, subsequently, their preferences on redistribution. The analysis reveals that while economic self-interest is an influential factor for formal workers, it is (unexpectedly) much less so for informal workers. Also, an increased economically insecure environment, reflected by high unemployment rates, does not motivate informal workers to an exceptional degree to turn towards the state for redistribution, despite greater exposure to economic risk. Labor market dualization does not translate into polarization at the individual level regarding redistributive preferences in Latin America and the Caribbean.

Criminal violence is one of the most pressing problems in Latin America and the Caribbean, with profound political consequences. Its effects on social policy preferences, however, remain largely unexplored. This article argues that to understand such effects it is crucial to analyze victimization experiences and perceptions of insecurity as separate phenomena with distinct attitudinal consequences. Heightened perceptions of insecurity are associated with a reduced demand for public welfare provision, as such perceptions reflect a sense of the state’s failure to provide public security. At the same time, acknowledging the mounting costs and needs that direct experience with crime entails, victimization is expected to increase support for social policies, particularly for health services. Survey data from twenty-four Latin American and Caribbean countries for the period 2008–12 show that perceptions of insecurity indeed reduce support for the state’s role in welfare provision, whereas crime victimization strongly increases such preferences.