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<p>This paper argues that high involuntary unemployment in Europe, unlike in the US, generates political resistance to reducing government spending. Voters consider not only the benefits of public goods but also how fiscal policy affects their employment prospects in rigid labor markets. Employed workers, particularly in the public or subsidized sectors, oppose cuts fearing job loss, while the unemployed support increases to improve job finding chances. This status-dependent distortion of preferences creates positive persistence in public expenditure: Higher initial public employment garners stronger political support against future cuts, leading to sluggish adjustment. In contrast, a competitive labor market yields spending based solely on median voter preferences for public goods, without path dependence. The model shows that persistence arises when the unemployed have less political influence and preferences for public goods are heterogeneous. Empirical examples include France’s resistance to 1990&#xa0;s austerity, slow subsidy removal in declining industries, and varying transition speeds in post-communist countries.</p>

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Voting for jobs: policy persistence and unemployment

  • 期刊论文

  • 发表日期：

    2026年7月24日

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  • Gilles Saint-Paul

摘要

This paper argues that high involuntary unemployment in Europe, unlike in the US, generates political resistance to reducing government spending. Voters consider not only the benefits of public goods but also how fiscal policy affects their employment prospects in rigid labor markets. Employed workers, particularly in the public or subsidized sectors, oppose cuts fearing job loss, while the unemployed support increases to improve job finding chances. This status-dependent distortion of preferences creates positive persistence in public expenditure: Higher initial public employment garners stronger political support against future cuts, leading to sluggish adjustment. In contrast, a competitive labor market yields spending based solely on median voter preferences for public goods, without path dependence. The model shows that persistence arises when the unemployed have less political influence and preferences for public goods are heterogeneous. Empirical examples include France’s resistance to 1990 s austerity, slow subsidy removal in declining industries, and varying transition speeds in post-communist countries.