The inequality trap A comparative analysis of social spending between 1880 and 1933

Using two alternative indicators of redistribution -social transfers and social spending- over the time-period 1880-1933 and using two alternative proxies for inequality -the percentage of non-family farms and the top income shares-, this paper shows that, contrary to what many studies on the origins of the welfare state appear to implicitly suggest, inequality did not favour the development of social policy even in its early stages. Since social policy developed more easily in countries that were previously more egalitarian, it seems that unequal societies were in a sort of inequality trap, where inequality itself was an obstacle to redistribution.comparative economic history, inequality, social policy, redistribution

Political Regime and Public Social Spending in Spain: A Time Series Analysis (1850-2000)

Over the past century and a half, Spain has had a tumultuous political history. What impact has this had on social policy? Democracy has had a positive effect on both the levels of social spending and its long-term growth trend. With the arrival of democracy in 1931, the transition began from a traditional regime (with low levels of social spending) to a modern regime (with high levels of social spending). Franco’s dictatorship, however, reversed this change in direction, retarding the positive growth in social spending. At the same time, the effect of left-wing parties was statistically significant only in the 1930s (prior to the Keynesian consensus) and in the period of the Bourbon Restoration (when the preferences of low-income groups were systematically ignored).En el último siglo y medio, España ha tenido una convulsa historia política. ¿Cuál ha sido el impacto sobre la política social? La democracia tuvo un efecto positivo tanto sobre los niveles como sobre la tendencia a largo plazo del gasto social. Con la llegada de la democracia en 1931 se inició, de hecho, la transición de un régimen tradicional (con bajos niveles de gasto social) a un régimen moderno (con altos niveles de gasto social). La dictadura franquista, sin embargo, revirtió este cambio de tendencia, retrasando el crecimiento definitivo del gasto social en España. Al mismo tiempo, el efecto de los partidos de izquierdas solo fue estadísticamente significativo en los años 30 (antes del consenso keynesiano) y en el periodo de la Restauración (cuando las preferencias de los grupos de renta baja eran ignoradas sistemáticamente).Ramón Areces Foundatio

Are dictatorships less redistributive? A comparative analysis of social spending in Europe (1950-1980)

Using new data on Spain and Portugal 1950-1980, this paper shows that non-democratic governments were less generous in providing social protection and also financed their meager social policy in a less redistributive way. This contradicts recent studies that hold that dictatorships have no significant effect on social policy. The analysis also reveals that, rather than provoking a "race to the bottom" or an increase in social spending, globalization favored the adoption of tax-funded systems instead of systems based on compulsory social security contributions

Fallos de mercado y seguro de paro en España antes de 1936

Antes de 1936, el seguro privado contra el paro estuvo básicamente a cargo de los sindicatos, mientras que las compañías comerciales no se adentraron en esta rama del seguro, lo que se podría explicar por las ventajas que los primeros tenían a la hora de combatir los problemas de selección adversa y riesgo moral. No obstante, el seguro de paro de base sindical alcanzó menos desarrollo que otros seguros sociales privados, como el de enfermedad, quizás por las dificultades financieras que implicaban las crisis económicas. Además, el seguro de paro se difundió sobre todo entre los trabajadores urbanos con salarios elevados. En España, sin embargo, las tasas de cobertura se mantuvieron por debajo de las de otros países europeos que tenían niveles de renta más elevados, aunque incluso en estos la cobertura privada contra el paro no llegaba al 10% de la población activa. En España, como en otros países europeos, los fondos sindicales contra el paro introdujeron estrictos incentivos económicos para combatir los problemas de riesgo moral, pero eso precisamente dificultó la difusión del seguro privado de paro

The inequality trap. A comparative analysis of social spending between 1880 and 1930

It is often assumed that the fight against inequality played an important role in the rise of the welfare state. However, using social transfers as an indicator of redistribution and three alternative proxies for inequality¿the top income shares, the ratio of the GDP per capita to the unskilled wage, and the share of non-family farms¿this article shows that inequality did not favour the development of social policy between 1880 and 1930. On the contrary, social policy developed more easily in countries that were previously more egalitarian, suggesting that unequal societies were in a sort of inequality trap, where inequality itself was an obstacle to redistribution

Political Regime and Social Spending in Spain: A Time Series Analysis (1850-2000) [WP]

Over the past century and a half, Spain has had a tumultuous political history. What impact has this had on social policy? Democracy has had a positive effect on both the levels of social spending and its long-term growth trend. With the arrival of democracy in 1931, the transition began from a traditional regime (with low levels of social spending) to a modern regime (with high levels of social spending). Franco’s dictatorship, however, reversed this change in direction, retarding the positive growth in social spending. At the same time, the effect of left-wing parties was statistically significant only in the nineteen-thirties (prior to the Keynesian consensus) and in the period of the Bourbon Restoration (when the preferences of low-income groups were systematically ignored)

A difficult consensus: the making of the Spanish welfare State

Before 1977, the Spanish government was unable (or unwilling) to increase taxation to finance new social programs. As an alternative to this lack of fiscal capacity, Spanish policy makers in the early 20th century promoted contributive social Insurance schemes (mostly financed from employers’ and employees’ contributions). To avoid social conflict in rural areas, rural laborers were also included in these programs. This, however, generated strong business opposition, especially from rural landowners and small-sized, labor intensive businesses (which were predominant in Spain). With the advent of democracy in 1931 new social plans were devised, but redistribution demands focused on land reform. After the Spanish civil war, Franco’s dictatorship consolidated a conservative social insurance model. Social benefits were kept very low and funding relied on employers’ and employees’ compulsory contributions. Labor moviment repression and trade protectionism allowed companies to easily transfer the cost of social insurance to wages and consumer prices. The introduction of income tax, after the restoration of democracy in 1977, gave way to a new social protection model. Taxfunded, non-contributory programs increased and social protection was extended to those without stable ties to the labor market. By 1977 wage dispersion had replaces property incomes concentration -particularly land ownership- as the main source of income inequality, and demands for tax-and-transfer redistribution replaced 1930s expropriation demands. Social spending growth, however, stagnated after the signing of the Maastricht treaty, before Spain reached the European levels

The determinants of social spending in Spain (1880-1960): Is Lindert right?

The main objective of this paper is to analyse the origins of the welfare state in Spain using the theoretical framework designed by Peter Lindert. With this aim, we offer an econometric analysis of the factors that determined the evolution of the Spanish social spending between 1880 and 1960. By using new quantitative evidence, we constructed a panel-data set divided in five years periods with the percentage of social spending disaggregated in three groups: health care, social security and welfare. Our analysis allows us to put the Spanish case within the international debate on the historical determinants of the welfare state. The results obtained highlight a number of interesting features specific to this country. On the one hand, Spanish social spending as a percentage of GDP remained relatively low compared to the figures recorded by other countries during the period under study. On the other hand, demographic factors played a determining role in the initial stages of the development of welfare state, while economic growth had a more ambiguous influence. The political and public finance variables also exercised some influence on the growth in public spending. However, globalisation was not a motivating force behind the welfare state in Spain.political economy, welfare state, public policy, spanish social policy, determinants of growth of public social spending