How much for whom? Explaining preferences for welfare benefits to short-time workers and the unemployed

Abstract

In response to labour-market crises, governments routinely adopt ‘short-time’ work schemes which supplement the incomes of workers who might otherwise be laid off. Such schemes increase the number of welfare recipients but could also lead to increased competition among different types of welfare claimants. We draw on data from an online panel survey fielded in Austria during the COVID-19 pandemic (2020–2022) to study individual preferences for financially supporting both short-time workers and the unemployed. We find that individuals prefer higher welfare benefits for low-income recipients and for those on short-time work compared to high-income recipients and those in unemployment. While we find cross-sectionally that these differences are related to individuals’ socio-economic position, we do not find longitudinal evidence that people adapt their preferences following switches in and out of different benefit programmes. Focusing on social beliefs as drivers of preferences, we find that negative attitudes towards the unemployed decrease preferences targeted at low income-earners. We conclude that long-term individual characteristics and attitudes rather than short-term changes in circumstances remain central to explaining benefit preferences under a dualised welfare regime during a labour-market crisis.