Modeling Korpi and Palme's "Paradox of redistribution and strategies of equality"

This chapter explores a feedback theory of redistribution presented in one of the most influential papers in the history of social policy: Korpi and Palme's "The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality, and Poverty in the Western Countries" published in 1998. According to Korpi and Palme, a country's redistribution and inequality rates reflect the design of its social insurance institutions. What may seem as being counterintuitive is that the countries with social insurance institutions that target the poor and low-income earners have higher levels of inequality than countries with social insurance institutions with lower levels of low-income targeting. In this chapter, the "paradox of redistribution" is translated to a System Dynamics isolation model by extracting the causal relationships implicit in Korpi and Palme's work. In the construction of the model, I exemplify how System Dynamics isolation models can be used as tools for thought experiments and assist in developing endogenous explanations of system behavior related to social policy.