Are Workers’ Welfare Contributions Just? The Interplay of Self-Interest and Normative Preferences in Germany

About this Session

Time

Mon. 11.03.'24 14:45

Room

Speaker

This study aims to explain how workers evaluate their monetary contributions to welfare based on two key factors proposed by current scholarship: self-interest and normative preferences. The former poses that individuals prefer to minimize their contributions, and the latter that preferences for norms regarding economic (re)distribution guide evaluations. We focus on the main welfare contributions from workers in Germany, taxes and social security contributions (SSC), posing two questions: how important are both causes for workers’ justice evaluations of welfare contributions?, and to what extent—if so—these causes differ for explaining the two types of welfare contributions? Our study posits that taxes and SSC entail distinct reciprocity potentials. Welfare contributions imply a sacrifice of income from workers to fund welfare-state regimes. Workers contribute to public and private organizations that provide a wide array of services. Therefore, contributors can expect to be reciprocated to some extent. However, we argue that different contributions generate varying expectations of reciprocity. Taxes represent a broad contribution to welfare programs, whereas SSC target specific domains and recipients. Consequently, taxes are expected to yield lower reciprocity potential, while SSC are associated with higher potential. Likewise, the role of self-interest should be attenuated by high reciprocity potentials which could compensate for income losses. Moreover, we suggest that high reciprocity potential can mitigate the role of self-interest by compensating for income losses. Conversely, the influence of normative preferences depends on specific norm content, such as egalitarian or meritocratic ideals, which may impact taxes and SSC differently. Our findings reveal that higher income is linked to perceptions of unjustly high welfare contributions, a significant effect observed solely for taxes, not SSC. Additionally, endorsing a meritocratic principle has a positive and statistically significant impact on assessments of both taxes and SSC, indicating that support for this justice principle is linked to perceptions of unjustly high contributions. Lastly, trust in political institutions is associated with evaluating both welfare contributions as more just. This study relies on data from the Legitimation of Inequality Over the Lifespan (LINOS) panel study conducted in 2012 and 2017, encompassing a representative sample of German employees. The initial wave included 4,731 respondents, with 2,741 participants re-interviewed in the second wave. Our dependent variables are assessments of the justice of taxes and SSC. The identification strategy relies on fixed-effects and between-within estimator panel models to estimate the effects of income and normative preferences on the justice evaluations of taxes an SSC.