SOCIO-ECONOMIC DETERMINANTS OF SOCIAL SPENDING IN THE EU
Abstract
The rise in social spending during the last century brought about a significant increase in the total government expenditures and according to many studies, also contributed to the rising public debt. The intent of social spending is reducing and alleviating inequality and poverty and enhancing social cohesion. Empirical evidence shows that countries that make greater efforts in social spending manage to reduce income inequality. However, it should not be on the account of endangering sustainability In this paper we examine whether certain socioeconomic variables influence the level of social expenditure in the EU countries in the last two decades. More specifically, we try to tackle the following questions: Do governments reduce social spending when debt rises,in order to avoid fiscal unsustainability? Do countries spend more on welfare in times of an economic downturn, i.e. is social expenditure counter-cyclical? Do countries with larger income inequality also have higher social expenditures aimed at reducing the larger gap?References
Adema, W., P. Fron, and M. Ladaique. 2011. Is the European Welfare State Really More Expensive? Indicators on
Social Spending, 1980–2012; and a Manual to the OECD Social Expenditure Database (SOCX). OECD Social,
Employment and Migration Working Papers, No. 124. OECD. doi:10.1787/5kg2d2d4pbf0-en.
Baqir, R. 2002. “Social Sector Spending in a Panel of Countries.†IMF Working Paper, WP/02/35, February.
Washington, DC: International Monetary Fund.
Castles, Francis G., and Francis Geoffrey Castles. The future of the welfare state: Crisis myths and crisis realities.
Oxford University Press on Demand, 2004.
Czech S., TusiÅ„ska M. “Economic growth, public debt and social spending. Should welfare state take the blame?,â€
„Ekonomia i Prawo. Economics and Lawâ€, Polszakiewicz B., Boehlke J. (ed.), Vol. 15, No. 1/2016, pp. 33–45. DOI:
http://dx.doi.org/10.12775/EiP.2016.003.
Dewan, S., and M. Ettlinger. 2009. Comparing Public Spending and Priorities Across OECD Countries.
Washington, DC: Center for American Progress. https://cdn.americanprogress.org/wpcontent/
uploads/issues/2009/10/pdf/oecd_spending.pdf
Hicks, Alexander M., and Duane H. Swank. "Politics, institutions, and welfare spending in industrialized democracies,
–82." American Political Science Review86, no. 3 (1992): 658-674.
Iversen, Torben, and Thomas R. Cusack. "The causes of welfare state expansion: deindustrialization or globalization?."
World politics 52, no. 3 (2000): 313-349.
Kittel, Bernhard, and Herbert Obinger. "Political parties, institutions, and the dynamics of social expenditure in times
of austerity." Journal of European public policy 10 (2003).
Levy J.D., “Welfare Retrenchment,†[in:] F.G. Castles, S. Leibfried, J. Lewis, H. Obinger, Ch. Pierson (eds.), The
Oxford Handbook of the Welfare State. Oxford: Oxford University Press, 2012.
Lora, Eduardo, and Mauricio Olivera. "Public debt and social expenditure: Friends or foes?." Emerging Markets
Review 8, no. 4 (2007): 299-310.
Molina-Morales, Agustin, Ignacio Amate-Fortes, and Almudena Guarnido-Rueda. "Social Expenditure in the
European Union: Does Inequality Matter?." Journal of Economic Issues 47, no. 3 (2013): 745-764.
Obinger, H. and Wagschal, U. “Social Expenditure and Revenues,†in The Oxford Handbook of the Welfare State,
edited by Castles…, 333-352. Oxford University Press, 2012.
Sancez, I., and F. Velázquez. 2007. “The Role of Ageing in the Growth of Government and Social Welfare Spending
in the OECD.†European Journal of Political Economy 23: 917–931. doi:10.1016/j.ejpoleco.2007.01.003.
Savage, Lee. "The politics of social spending after the great recession: The return of partisan policy making."
Governance32, no. 1 (2019): 123-141.
Schuknecht, Ludger and Zemanek, Holger, Social Dominance (February 21, 2018). CESifo Working Paper Series
No. 6894. Available at SSRN: https://ssrn.com/abstract=3164036
Schmidt, Manfred G. "Determinants of social expenditure in liberal democracies: the post World War II experience."
Acta politica 32 (1997): 153-173.
Seater, J. 2013. “Government Debt, Entitlements, and the Economy.†In The Handbook of Major Events in Economic
History. doi:10.4324/9780203067871.ch35.
Trenovski, B. (2013) The Key Macroeconomic Policies in Terms of the Global Economic Crisis,Center for Economic
Analyses – CEA, Skopje.
Trenovski, B. and Tashevska, B. (2015) ‘Fiscal or monetary dominance in a small, open economy with fixed
exchange rate – the case of the Republic of Macedonia’, Zbornik radova Ekonomskog Fakulteta u Rijeci: Časopis
za Ekonomsku Teoriju i Praksu, Vol. 33, No. 1, pp.125–145.
Trenovski, B., Tashevska, B. and Makreshanska, S. (2015) ‘The global economic crisis – what should not be forgotten’,
CEA Journal of Economics, Vol. 10, No. 1, pp.99–112.
Wilensky, Harold L. The welfare state and equality: Structural and ideological roots of public expenditures. Vol. 140.
Univ of California Press, 1974.
