Journal Article

Dialectics of institutional change: the transformation of social insurance financing in Israel

Michal Koreh and Michael Shalev

in Socio-Economic Review

Published on behalf of Society for the Advancement of Socio-Economics

Volume 7, issue 4, pages 553-584
Published in print October 2009 | ISSN: 1475-1461
Published online September 2009 | e-ISSN: 1475-147X | DOI: https://dx.doi.org/10.1093/ser/mwp018
Dialectics of institutional change: the transformation of social insurance financing in Israel

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Social insurance financing is notoriously path-dependent, yet in Israel a series of unobtrusive changes ultimately led to the virtual elimination of employer contributions. This outcome is explained by combining insights into the politics and political economy of taxation with a theoretical approach to understanding institutional change which takes conflict seriously. Institutional arrangements typically emerge as settlements of inherently contradictory goals, and their foundational contradictions are not necessarily eliminated through processes of reproduction. Our case study illustrates how conflicting interests generate susceptibility to institutional change and shape its trajectories. While recent extensions to path-dependency theory suggest that institutions become vulnerable when returns decrease, we find that change may result from unbalanced returns (increasing for some while decreasing for others) or altered conditions which unleash repressed conflicts of interest. Further, in contrast to the expectation that institutional evolution follows a unidirectional path in which reversals are unlikely, we identify a dialectical trajectory which potentially includes the revival of seemingly foregone alternatives.

Keywords: institutional change; public finance; welfare state; I38 government policy, provision and effects of welfare programs; H55 social security and public pensions; H20 taxation, subsidies and revenue—general

Journal Article.  12741 words.  Illustrated.

Subjects: Moral Philosophy ; Corporate Social Responsibility ; Welfare Economics ; Political Economy ; Economic Sociology

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