Is unemployment insurable? Employers and the institutionalization of the risk of unemployment

Abstract

In order to shed light on the recent debates that are reinterpreting the role played by organized employers in the development of modern social policy, this paperexamines the origin of the system of contributory unemployment insurance during the Weimar period. Contrary to the claims of the 'laborist' accounts of the origin ofthe modern welfare state that view the working class as the most important protagonist behind the transition from 'assistance' to 'insurance' policies, this paperargues that employers' dissatisfaction with the means-tested system ofunemployment assistance and employers' endorsement of an insurance solution tothe risk of unemployment was the decisive factor leading to the introduction of theinsurance system during the Weimar period.Drawing on original archival material, this paper reconstructs the political preferences of employers towards various institutional solutions to the risk of unemployment and focuses on a sectoral conflict between employers of large andsmall firms over the organization of the 'risk pool' within the system of unemploymentinsurance. While the existing literature concerned with the political role played by employers in the development of the modern welfare state fails to provide the analytical elements for an understanding of employers' preference towards social policies, this paper attempts to address this limitation of the existing literature by providing the microfoundations for an understanding of sectoral differences in thedegree of employers support for alternative social policies