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Pioneered in the 1970s and 80s through the works of Walter Korpi, Gøsta Esping-Andersen, and John Stephens, the power resource theory is a method of approach utilized to examine the characteristics and varying levels of impacts of social policies as well as social inequalities on advanced industrialized nations. The power resources theory attempts to account for the various approaches to social policy adopted by nations, predominately focusing on the role and strength of labor mobilization to gather a more encompassing explanation for the varying levels of development and efficiencies of social policies. Therefore, the power resources theory “helps to account for the emergence and development of institutions” and the varying “empowered actors attempting to generate differential distributions of rewards.” This is a result of the varying policy preferences of the different social classes.

While the power resource theory is arguably the most successful theory in explaining the variations in development and efficiencies of social protection systems and institutions among developed democracies, there are criticisms that point out the lack of accountability for factors such as variations in “coverage, extension, and generosity among welfare states” in addition to not accounting for the importance of political mobilization based on social class. Competing theories have also challenged PRT with alternative explanations for the varying levels of welfare development such as the importance of employers and cross-class alliances in coordinated market societies.