Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212892 
Year of Publication: 
2018
Series/Report no.: 
BOFIT Discussion Papers No. 7/2018
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
When does business support the expansion of social policy in the developing world? Existing work on managers' preferences has tended to concentrate on the developed world, where governments can credibly commit to policy, tax evasion is constrained, and mechanisms exist to hold the bureaucracy accountable for policy implementation. In this paper, I relax these assumptions, arguing that weak institutions create opportunities for some firms to shift costs onto others: making social policy more attractive. I argue that firms with political connections are uniquely positioned to benefit from subsidies and property rights protection, which decreases the cost of social policy, while firms with low visibility can evade taxes and free-ride off universalistic social policy. Such firms will support social policy even where institutions are poor. I test this argument using a survey of 666 firms in 10 Russian regions.
JEL: 
L21
L33
O15
O17
H53
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-217-4
Document Type: 
Working Paper

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