During the nineteenth century, most Western societies extended the franchise, and then undertook previously unprecedented redistributive programs. We argue that these political reforms can be viewed as strategic decision by elites to prevent widespread social unrest and revolution.

This paper argues that moderate unemployment insurance not only reduces the uncertainty faced by risk-averse workers but also improves efficiency and raises output. We develop a model in which the decentralized equilibrium is inefficient without unemployment insurance, because the labor market...