Abstract:Many studies have found that countries with Ghent systems of unemployment insurance have higher rates of unionization than countries with state--administered unemployment insurance. With data going further back in history, this paper demonstrates that the introduction of Ghent systems had no effect on unionization rates. We argue that the Ghent effect identified in the existing literature came about as a result of increasing state subsidization and benefit generosity in the 1950s and 1960s. Exploring the partisan politics surrounding Ghent systems, we show that progressive Liberals ("Social Liberals") favored Ghent designs while Social Democrats favored state--administered unemployment insurance before the Second World War. We also present some evidence suggesting that Left governments, faced with Ghent systems that were not of their choosing, promoted state subsidization in the postwar era, and thus helped generate the Ghent effect identified in the existing literature.2 This paper engages in a historical--comparative analysis of the effects of the design of unemployment insurance on rates of unionization and the politics of designing unemployment insurance in some twenty countries that are today industrialized, rich and democratic. The motivation behind our study is as follows.