Mimicking the Opposition: Bismarck's Welfare State and the Rise of the Socialists

This
paper examines the political consequences of introducing the welfare state
targeted at blue-collar workers in 19th-century Germany. I conceptualize
Bismarck’s reform as an accommodation strategy to combat the socialist party as
an emerging challenger party. The result of a difference-in-differences design
shows that the socialist party benefited in elections due to the reform. The
mechanism analysis points to the socialists’ issue ownership by adopting a
stronger reformist stance. The results are not driven by other political and
economic channels related to the reform.