Retired persons and support for cutting spending on unemployment benefits July 2013

17 Pages·2013·0.48 MB·English

by  Amilcar Moreira

1

A ‘gray conspiracy’? Retired persons and support for cutting spending
on unemployment benefits

Amílcar Moreira
Institute of Ageing / Institute of Social Sciences
University of Lisbon

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Conteúdo

1. Introduction.......................................................................................................................................................................2

2. Bringing the Theory of Reasoned Action to the study of policy preferences....................................................................3

2.1. Towards a ‘reasoned’ approach to the study of policy-preferences.......................................................................4

3. Are retired persons more likely to support cuts in spending on unemployment protection? A reasoned approach.........5

3.1. Brief description of the sample..................................................................................................................................8

3.2. A descriptive approach..............................................................................................................................................9

3.2. A multivariate approach...........................................................................................................................................10

4. Conclusion......................................................................................................................................................................13

Annex.................................................................................................................................................................................15

References.........................................................................................................................................................................16

July 2013
2

1. Introduction

Dating back to the 1980’s, in the United States, there is a debate as to the implications of demographic
ageing in the nature, and extent, of the welfare state (see Kohli 2005: 10). This debate is set by a claim –
which Ribeiro Mendes (2005) later (brilliantly) coined as a ‘gray conspiracy’ – that, in a context of economic
scarcity, older people will use their increasing electoral power to support the allocation of public resources in
policies - such as pensions, healthcare and care services – that favour them directly, even if at the expense
of the younger generations (see Preston, 1984; Longman, 1987).1

This hypothesis has received some empirical support. 2 Based data from the ISSP, Smith (2000: 12-3)
argues that support for public spending on retirement benefits is higher in individuals aged over 65 - even if
this does not apply to all countries surveyed. Based on data from Germany3, Wilkoszewski (2009: 20) argues
that support for pension benefits increases with age. In contrast, support for policies that involve transfers
from the old to the young - such as lower taxes for parents, financial assistance to parents who give up their
jobs, or a substantial increase in child benefits - decreases with age.

However, other studies seem to question, if not contradicts this thesis. Based on data from a 2001
Eurobarometer, Kohl (2003: 13-5) argues that the differences of opinion between wage groups are well
bellow what generational conflict advocates would suggest. Using data from the Swedish Welfare State
Surveys, Svalfors (2008: 385-7), further argues that although support for policies targeted at younger people
(child benefits, childcare, etc.) is lower in those aged between 65 and 74, support for policies towards the old
is high throughout all age groups.

As the previous paragraphs suggest, much of this debate on the emergence of age-based conflicts around
the welfare-state has concentrated on the (re)distributive function of the welfare state, thus neglecting the
other key function of modern welfare states: the regulation of labour markets. 4. This lack of attention is
somewhat surprising, as the regulation of labour markets is a fertile ground for potential age-based conflicts:
between retired persons, which would benefit from increasing the share of public resources put into pensions
or healthcare, and active workers, which would benefit from more investment in active labour market policies
or unemployment benefits; or between older workers, who would benefit more from seniority-based wage
systems and higher levels of employment protection, an younger workers who would favour productivity-
based wage-systems and lower levels of employment protection (see Moreira et al, 2010; see Scarpetta,
1996; Jimeno and Rodriguez-Palenzuela, 2003; Bassanini and Duval, 2006). This paper looks into whether
(older) retired persons are more likely to support cutting spending on unemployment benefits – even if this
might be detrimental to younger (active) workers.

So far, the evidence on this topic is sparse and far from conclusive. For instance, based on a study of voting
behaviour in referendums on social policy reforms in Switzerland, Bonoli and Häuserman (2009: 224)
suggest that people over 65 are more likely to support a reduction of unemployment protection than those
aged 18 to 39. Also, Duman (2009: 250) finds that both in Germany and the US support for spending on
unemployment benefits decreases with age. Finally, Bursemeyer et al (2009: 205) find that individuals aged
between 30 and 59 and in work, are more likely to support higher spending on unemployment benefits than
those who are already retired. However, in all these cases age-effects remain rather small. Furthermore,
there is evidence that actually contradicts such a view. Based on ISSP data, Fraile and Ferrer (2005: 470)
argue that support for cuts in the level of unemployment benefits spending actually decreases with age.

1 The other side of this is the emergence of what Turner calls the ‘politics of resentment’ against older people (1989: 591).
2 For a more comprehensive review of the literature on this topic see Wilkoszewski (2009) and Goerres and Tepe (2009).
3 However, we should bear in mind that these results are based on a country where intergenerational conflicts are particularly evident
(see Bursemeyer et al 2009: 201-2).
4 This becomes ever more important as these conflicts might help to shape the definition of models of labour market regulation in ageing
societies, which can have a significant impact in the performance of labour markets (see Nickell and Layard, 1999) and, consequently,
on the sheer sustainability of modern welfare states.
3

Based on the same data, but using a more advanced method of statistical analysis5 , Blekesaume and
Quadagno (2003: 9-15) also find a positive relation between age and support for welfare policies towards the
unemployed.6

Besides failing to provide conclusive evidence on the subject, this set of studies present significant gaps in
how they conceptualise (and measure) individuals’ policy-preferences. Bearing in mind insights put forward
by Ajzen and Fishbein’s (1980) Theory of Reasoned Action (TRA) – which has been successfully used to
explain public support for environmental policies (Routhe et al 2005, Russenberger, Bjornlund and Xu, 2012)
– one can point to two types of problems. The first, concerns the fact that, with the exception of Blekesaume
and Quadagno (2003: 419), authors tend to ignore the importance of individuals’ social norm in how they for
their preferences.

The second is the failure to differentiate between individuals’ attitudes and their preferences, and how this
are related. As it will be argued later on (see Section 2), a person’s policy preference is a function of a
person’s attitude towards that given policy, and her subjective norm. Contrast this Blekesaume and
Quadagno 2003 (2003: 419), who try to derive individual’s preferences directly from their expressed attitudes
as to the role the State should have in the protection of the unemployed; and with Bursemeyer et al. (2009:
205), Fraile and Ferrer (2005: 468) or Duman (2009: 246), which look specifically at individuals’ stated
preferences, but then fail to acknowledge the role if individual attitudes in their formation.

The purpose of this paper is therefore, to test the hypothesis that are retired persons more likely to support a
cutting spending on unemployment benefits. In doing so, the paper puts forward an alternative explanatory
that is more apt at study how individuals form their policy preferences. The paper is structured as follows.
Section 2 makes the case for bringing Ajzen and Fishbein’s (1980) Theory of Reasoned Action (TRA) in to
this field of research, and puts forward the cornerstones of a ‘reasoned’ approach to the study of policy
preferences. Based on this general approach, Section 3 tests the hypothesis that retired persons are more
likely to support cuts in spending on unemployment benefits. Section 4 sums-up the main contributions of the
paper to the literature.

2. Bringing the Theory of Reasoned Action to the study of policy
preferences

Ajzen and Fishbein’s (1980) Theory of Reasoned Action (TRA) departs from the premise that most
behaviours of social relevance are under volitional control and, therefore, that it is possible to predict a
person’s behaviour from his/her behavioural intentions, i.e. the person’s readiness or desire to perform a
given behaviour (1980: 41). A person’s behavioural intention is a function of two factors: the person’s
attitude, i.e. her (un/)favourable feelings towards that behaviour; and her subjective norm, i.e. her perception
of the social pressure from important others to support or perform a given action (1980: 6).

A person’s attitude towards a given behaviour is dependent on her salient behavioural beliefs. These reflect
her belief about the likely consequences of that action (outcome beliefs), multiplied by her subjective
evaluation of those consequences (outcome evaluations) (1980: 6, 67). Subjective norms reflect a person’s
beliefs about what significant others think she should do (normative beliefs), multiplied by her motivation to
comply with the will of the significant others (1980: 6, 73). Crucially, the relative importance of the attitudinal
and the normative component in the formation of behavioural intentions will vary, depending on the nature of
the behaviour in question and or individual socio-psycho-demographic factors (1980: 58-9).

5 In contrast with Fraile and Ferrer (2005: 471), that try to capture national/societal effects with a simple logit model, Blekesaume and
Quadagno 2003 (2003: 9-10) use a two-level model, which provides better estimates about the effects of maro-level variables in
explaining variations in preferences for labour market regulation.
6 However, the effect of the age variable becomes statistically insignificant after controlling for the importance of equalitarian ideology in
society.
4

Figure 1 – Theory of Reasoned Action (TRA)

Source: Ajzen and Fishbein (1980: 84)

Whilst their focus is on the role of attitudinal and normative elements in explaining the formation of
behavioural intentions, Ajzen and Fishbein (1980: 9, 82-90) do recognize that a person’s behaviour is
influenced by external variables, notably demographic factors, such as age, sex, occupation, education, etc.;
attitudes towards targets (namely, individuals, social groups, institutions and policies; and personality traits,
such neuroticism, authoritarianism dominance, etc (see Figure 1). However, the authors argue (1980: 82-4),
one cannot establish a direct relation between these external variables and individual’s behaviour. Rather,
external variables influence individual’s intentions and behaviour through their effect on behavioural and
normative beliefs, or on the relative weight of the attitudinal and normative components (1980: 83-5).

2.1. Towards a ‘reasoned’ approach to the study of policy-preferences

Looking at Theory of Reasoned Action described earlier, one cannot but highlight the closeness of Ajzen and
Fishbein’s (1980) notion of behavioural intention it our common understanding of policy-preferences - here
defined as the expression of support for a given policy. If one assumes that this notion of behavioural
intention can be equated with the notion of policy-preference, then TRA offers a very valid standpoint from
which one can study the formation of policy-preferences.

This is not to say that TRA can be immediately transposed to the study of policy-preferences. Here we can
identify two sorts of problems. The first, concerns the some inherent limitations of Ajzen and Fishbein’s
(1980) original framework. The best example here is the fact that fact that the authors fail to recognise the
role of institutions, which the existing evidence has abundantly shown influences how individuals form their
policy-preferences (see Wendt et al, 2011).

The second concerns the availability of data to operationalise Ajzen and Fishbein’s (1980) original
framework. In the absence of dedicated surveys that can actually replicate this framework, one can only rely
on the existing comparative studies on the topic to try to operationalise an alternative framework for
explaining how individuals form their policy-preferences. However, this raises a number of problems. Of the
5

two main comparative databases traditionally used in the literature, only the ISSP modules on the ‘Role of
Government’ provides data on individuals’ preferences on whether spending on unemployment benefits
should increase (or decrease), which is crucial to operationalise the theoretichal framework put forward by
Ajzen and Fishbein (1980).7

Whilst helpful, the ISSP database does impose some important restrictions to the operationalisation of Ajzen
and Fishbein’s (1980) framework. First, it does not provide a direct measurement of individuals’ attitude
towards the idea of supporting a given policy (behavioural belief). However, it does provide data on individual
attitudes towards a set of policies/policy institutions that, as can reasonably be argued8, can be used as a
suitable proxy of individuals’ behavioural beliefs.

Second, the ISSP database does not allow identify the person’s’ significant others (and their preferences) or
her motivation to comply with them - i,e., her normative beliefs. In order to overcome this limitation, one can
instead look at the effect of a more general social norm - i.e. the level of societal support for a given policy –
on a person’s policy- preference. The underlying assumption here is that the stronger the social support for
cuts on unemployment benefits the more costly will be for individual’s to dissent from the social norm, i.e. the
higher the referent motivation. Finally, the ISSP database does not provide the information necessary to
capture the outcome beliefs and evaluations that shape a person’s attitude. In order to overcome this, one
the best available option is to identify the set of variables that can be seen to impact on individuals’
perception and evaluation of the outcomes of the policy in question.

So the challenge here is to put forward a framework that overcomes the intrinsic limitations of Ajzen and
Fishbein’s (1980) TRA and, at the same, is operationalisable within the limitations imposed by the available
data. Within these limitations, one can move to specifying the key cornerstones of an alternative (‘reasoned’)
approach to the study of policy preferences. The key assumption in this alternative framework is that each
person holds a preference to with regards a given policy. That preference is the result of a reasoned process
by which she balances her evaluation of the perceived outcomes of a given policy/institution (i.e. her attitude)
and the perceived pressure from relevant others to support (or oppose) that policy (i.e., her social norm).
Depending on the type of policy in question, the balance between the attitudinal and normative element will
vary.

The other key assumption is that a person’s policy-preference is influenced by a series of external variables,
such as psychological traits, socio-economic factors or social institutions. However, and crucially, these
external factors do not have a direct effect on a person’s policy-preferences. Instead, their influence occurs
only through their effect on the person’s attitude, or social norm. Thus, external factors can influence a
person’s perception of the outcomes of the policy in question, and her evaluation of those outcomes. In the
same way, these external factors can influence both the preference of relevant others, and (crucially) the
perception of benefits (or costs) of (not) complying with the will of relevant others.

In the remainder of this paper, this alternative framework will inform an empirical analysis aimed at testing
the hypothesis that retired persons are more likely to support cutting spending on unemployment benefits.

3. Are retired persons more likely to support cuts in spending on
unemployment protection? A reasoned approach.

Having sketched the basis for a ‘reasoned’ approach to the study the next step in this endeavour is to
demonstrate how this approach can be used to explain how individuals may choose to support the
introduction of cuts to spending on unemployment benefits. In line with the framework sketched earlier, this

7 The European Social Survey (2009) only provides us with data on individual attitudes towards the role of the Government in providing
a decent standard of living to the unemployed.
8 As can be see above (see Figure 1), the authors already assume that a person’s attitude towards a given behaviour is influenced by a
her attitute towards a given target.
6

paper argues that a person’s support for cutting spending on unemployment benefits can be explained by
two factors: her attitude towards the role of Government in providing a decent standard of living to the
unemployed, and the level of support for cutting spending on unemployment benefits across society
(subjective norm). Thus, the more negative is someone’s attitude towards the role of Government in
providing a decent standard of living to the unemployed, the more likely she will support cutting spending on
unemployment benefits. In the same way, the stronger is the support for cutting spending on unemployment
benefits in society, the more likely she will support cuts herself.

Finally, a person’s attitude towards the role of Government in providing a decent standard of living to the
unemployed is influenced by a set of exogenous variables. Bearing in mind that the outcome of having a
public system of unemployment insurance is fairly evident, and consistently perceived by all individuals, it will
be argued that these external variables will influence a person’s evaluation of the protection provided by the
public system of unemployment.

Looking through the literature, one can identify a number of factors that might influence individuals’
evaluation of the existence of a public system of unemployment insurance. The most commonly cited is, of
course, income. Meltzer-Richard (1981) suggest that, under the context of a flat-rate benefit paid through a
proportional tax, those bellow the mean level of income will be supportive of redistributive policies – up until
the point that the benefit is outweighed by the efficiency cost of taxation (Cusack 2005: 2). In light of this, it
can be argued that individuals in the top tiers of the income ladder are more likely to have a negative attitude
about the role of Government in providing a decent standard of living to the unemployed. However, as the
ISSP data on income is far from adequate9 this income effect will be measured through a scale that
measures individuals self-perceived socio-economic status (see Table 1).

The rationale underlying the Meltzer-Richard (1981) model can be further expanded by taking in
consideration how variations in the tax system and in the generosity of unemployment insurance benefits
might impact on individuals’ attitude towards the role of Government in providing a decent standard of living
to the unemployed. Thus, it can be argued that the higher the level of taxation, as measured by the overall
weight of taxation on the economy (see Table 1), the less likely will be for people to perceive that the benefit
of having a public system of unemployment insurance is outweighed by the efficiency cost of taxation. In the
same way, the more generous the system of unemployment benefits – as measured by easiness of access
to unemployment benefits and the replacement rate (i.e. the share of the person’s wage previous to loosing
her job) secured by those benefits (see Table 1) - the more likely will people perceive the benefit of having a
public system of unemployment insurance as outweighing the efficiency cost of taxation.

In addition to these factors, a person’s attitude towards the role of Government in providing a decent
standard of living to the unemployed might be influenced by religion (see Neustadt 2010: 7-9). According to
Scheve and Stasavage (2006: 263-4), religious engagement can act as an alternative form of insurance (to
that provided by the State) against adverse events, such as unemployment or ill-health. Accepting that both
public and private forms of insurance have costs, they further argue, those individuals who tend to privately
insure themselves via religion will prefer a lower level of insurance by the state. This leads to the hypothesis
that more religious people, here measured by a variable tallies the frequency of attendance of religious
services (see Table 1), are more likely to have a negative evaluation of the institution of public
unemployment insurance.

Lastly, and possibly more relevant to this paper, a person’s attitude towards the role of Government in
providing a decent standard of living to the unemployed might reflect her (perceived) exposure to the labour
market risks. The common assumption in this stream of literature is that individuals’ tend to insure against
foreseeable risks. Thus, the stronger the perception of a risk of unemployment, the more positive will be a
person’s evaluation of the public system of unemployment insurance.

9 More specifically, different countries use different scales to measure the respondent’s household income, thus making a cross-national
comparison more difficult to implement.
7

Table 1 - Description of Variables

VARIABLE DESCRIPTION
cutspendub Respondent feels that Government should spend less/much less on
unemployment benefits (reference category: Government should spend same as
now/more/much more on unemployment benefits.
negattub Scale measuring the respondent’s negative attitude towards the role of
Government in providing a decent standard of living to the unemployed, going for
‘it definitively should not be the role of the Sate to provide a decent standard of
living to the unemployed’ (4) ‘it definitively should be the role of the Sate to
provide a decent standard of living to the unemployed’ (1).
subnormreg Percentage of people saying that the Government should spend less/much less
on unemployment benefits in the respondent’s region of residence.
female Respondent is a female (reference category: male)
single Respondent is single/widow/divorced (reference category: married/cohabitant)
degree Highest education level (No formal qualification, incomplete primary; Lowest
formal qualification; Above lowest qualification; Higher secondary completed;
Above higher secondary level, other qualification; University degree completed,
graduate studies)
childhh Existence of children in the respondent’s household (reference category:
married/cohabitant)
ses Scale measuring the respondent’s self-perceived socio-economic status, going
from from 1 (Bottom) all the way to 10 (Top).
taxpress Total Taxes (including Social Security contributions) as % of GDP (Source:
OECD, 2006)
accessub Easiness of access to unemployment insurance benefits in the respondent’s
country of residence (in 2006), measured by a ratio between the number of
monthly contributions needed to be eligible to unemployment benefits and the
number of months considered reference period for which these contributions are
considered (reference period). (Source: MISSOC, 2007)
genub Net replacement rate of unemployment benefits for a single individual earning
100% of the average wage, in the 7th month of unemployment, in the
respondent’s country of residence (in 2006) (Source: OECD, 2007).
religious Attendance of religious services (Never; Less frequently; Once a year, Several
times a year, Once a month, 2 or 3 times a month; Once a week; Several times
a week)
retired Respondent is retired (reference category: employed full-time)
unempate Percentage of individuals in the labour force that have not worked more than one
hour per week, in the respondents’ country of residence, in 2006 (source:
Eurostat)
EPL Index measuring the strength of the overall Employment Protection Legislation in
the respondent’s country of residence (Source: OECD)

Looking through the literature, one can identify both macro and micro-level factors that might influence a
person’s perception of her exposure to the risk of unemployment. At the macro level, people’s perception of
risk might be influenced by the way the labour market is regulated. Thus, one can expect that the stronger
the protection of employment relations – here captured by the OECD’s (overall) Employment Protection
Legislation index - the weaker the perception of exposure to risk – and, consequently, the less positive the
attitude towards the role of Government in providing a decent standard of living to the unemployed (see
Boeri et al, 2003). Alternatively, individuals might look at the level of unemployment as an indicator of their
exposure to the risk of unemployment (Fraile and Ferrer 2005: 464). Thus, the higher the level of
unemployment the more stronger will be the feeling of vulnerability - and, consequently, the more positive
the attitude towards the role of Government in providing a decent standard of living to the unemployed,

At the micro-level, the literature suggests that the perception of exposure to the risk of unemployment, and
their attitude towards the role of Government in protecting the unemployed, is conditioned by two sets of
factors: the nature of one’s occupation (see Iversen and Soskice, 2001; Rehm, 2009) and, more important to
8

this paper the individual’s position in the labour market (see Rueda, 2005). In this context Bursemeyer et al
(2009: 199) argue that, because they are no longer in the labour market - and therefore not exposed to the
risk of unemployment – retired persons are less likely to supportive of the institution of unemployment
insurance. In the sections bellow, we will put this hypothesis to the test.

3.1. Brief description of the sample

Figure 2 – Variables included in the model (distribution)

As mentioned earlier, this study will be based on the data provided by the ISSP 2006 Role of Government
module. Whilst this database provides data for 27 countries, this study will only cover EU member-states (in
2006), for which there is readily available comparable data on labour market institutions included in the
explanatory model sketched earlier (see Table 2).10 Furthermore, in order to establish more clearly the effect
of being retired on the likelihood of supporting a cut to spending on unemployment benefits, it was decided to
restrict the sample solely to individuals that are either retired or in full-time employment. This has generated
a sample of 12.211 observations (see Table 2).

10 Besides non-EU member states, it was decided to exlude Dutch respondents from the Buitenland, for which it was not possible to find
data on the regional level of unemployment.
9

3.2. A descriptive approach

Looking at the set of countries under analysis, one cannot but notice the significant esteem for the institution
of public-based unemployment insurance, which is evident in the data on individuals’ attitudes towards the
role of Government in providing a decent standard of living to the unemployed (see Figure 2). Consequently,
one cannot be surprised that, with some exceptions, it is difficult to find a widespread support for cutting
spending on unemployment benefits (see Table 2).

Table 2 – % of Retired persons supporting a cut in spending on unemployment benefits,
by country (2006)

Country Sample % of Respondents Supporting Cuts to Spending
on Unemployment Benefits

In total sample Retired only Diff.

c Denmark 1.117 20,1 12,9 7,2
diS
rW
o
N Sweden 862 25,7 18,4 7,3

e France 1.469 41,8 39,9 1,9
v
ti
vaS
erW Germany 1.124 18,8 11,4 7,4
s
n
o
C Netherlands 637 39,1 29,7 9,4

t Hungary 724 24,4 21,9 2,5
s
ost-muniWS CRzeepcuhb lic 958 40,4 36,2 4,2
Pm
o
C Poland 967 16,5 14,9 1,6

atin WS Spain 1.715 7,9 7,9 0
L Portugal 1.428 11,0 9,3 1,7

ral S UK 613 43,1 28,7 14,4
beW
Li Ireland 597 13,2 7,2 6

Total 12.211

Still, there is a significant level of variation in the degree of support to cutting spending on unemployment
benefits - and not necessarily along the welfare-typology lines. A good example here are the countries
traditionally seem as composing the liberal model of social protection in Europe: the UK and Ireland. Thus,
whereas the UK is the country with the highest level of support for the introduction of cuts in this area
(43,1%), in Ireland only 13,2% of respondents support the introduction of cuts. In the same way, the degree
of support for cuts in the Czech Republic (40,4%) is significantly above of that of the other representatives of
the post-communist model of welfare protection (see Table 2).
10

Although there is no evidence that support for cutting expenditure varies by reference to the overall model of
welfare protection, one cannot but highlight the contrast between the high level of support for cuts in
spending in the conservative welfare states - namely in France (41,8%) and the Netherlands (39,1%)11 - with
the low level of support in the countries from the Latin rim of welfare protection: 7,9% in Spain, and 11% in
Portugal. Countries belonging to the Nordic model welfare model show only within average support for the
introduction of cuts to spending on unemployment benefits (see Table 2).

Finally, one cannot but point out that the degree of support for cutting spending on unemployment benefits
amongst retired respondents is (in general) lower than in the total sample - which raises, already, some
doubts about the empirical validity of the research hypothesis put forward earlier. Whilst in the majority of
cases the differences are not particularly significant, in the UK and, to a lesser degree, in the Netherlands,
Denmark and the degree of support for cuts in the group of retired people is significantly bellow of the
national average.

3.2. A multivariate approach

Having looked at the broad patterns of support for cutting expenditure on unemployment benefits, the task
now is to put the hypothesis that retired persons are more likely to have a negative attitude towards the role
of Government in providing a decent standard of living to the unemployed – and consequently of being more
likely to support cutting spending on unemployment. Bearing in mind the dichotomous nature of the
dependent variable (see Table 1), and the endogenous nature of individuals’ attitudes, this was done by
fitting a two-stage (or IV) probit model, using a two-step estimator (see Table 2)12.

In line with the ‘reasoned’ approach sketched earlier, the model assumes that the likelihood of someone
supporting cutting spending on unemployment benefits is a function of the his/her attitude towards the role of
Government in provide a decent standard of living to the unemployed, and his/her social norm – i.e. the
percentage of people in the respondent’s region that support cutting spending on unemployment benefits
(see Table 3, 2nd Stage Model). However, in order to control for other sources of inter-individual variation, a
number of socio-demographic variables - age, gender, marital status and presence of children in the
household (see Table 3, 2nd Stage Model) - were added to the model. In addition to this, the model assumes
that individuals attitude is endogenous to the probability of supporting cuts to spending on unemployment
benefits and that they are, in turn, influenced by a series of exogenous variables, namely her position in the
income ladder, the generosity of the system of unemployment benefits, the level of taxation she is subjected
to, her level of religiosity and her perceived exposure to the risk of unemployment (see Table 3, 1st Stage
Model).

As can be seen bellow (see Table 3), the tests frequently used to assess the validity and explanatory power
of two-stage probit models seem to validate the set of theoretical and methodological choices made earlier.
Thus, the Wald Test of Exogeneity seems to validate the option of treating a person’s attitude as
endogenous. Also, the F statistic is clearly above the 1013, which to seems to confirm the significance of the
set of exogenous variables that we see as influencing individual’s attitudes.14 Finally, although it does not do
this in a clear and definitive way, the Amemiya-Lee-Newey Test does provide a strong indication that this set
of variables is not correlated with the error term in the second stage model - which would attest to the
statistical validity of the model.

11 The much lower level of support for cuts in spending on UB in Germany (18,8%) can possibly be related to the long-term
consequences of the process of reunification.
12 The model is fitted using the ivprovit command in Stata.
13 As a rule-of-thumb, an F statistic bellow 10 signals the existence of a ‘weak instrument’ problem.
14 However, if one looks at the R2 statistic, there is reason to believe there is significant space for improving our ability to explain
variations in individuals’ attitudes