The Politics of Trade

Welfare state reform in times of austerity is notoriously difficult because most citizens oppose retrenchment of social benefits. Governments, thus, tend to combine cutbacks with selective benefit expansions, thereby creating trade-offs: to secure new advantages, citizens must accept painful cutbacks. Prior research has been unable to assess the effectiveness of compensating components in restrictive welfare reforms. We provide novel evidence on feasible reform strategies by applying conjoint survey analysis to a highly realistic direct democratic setting of multidimensional welfare state reform. Drawing on an original survey of Swiss citizens’ attitudes toward comprehensive pension reform, we empirically demonstrate that built-in trade-offs strongly enhance the prospects of restrictive welfare reforms. Our findings indicate that agency matters: governments and policy makers can and must grant the right compensations to the relevant opposition groups to overcome institutional inertia