Dynamics of social protection spending in the post-communist countries of Eastern Europe and the former Soviet Union: an enduring legacy of the transition shock?

Abstract

ABSTRACT The post-communist countries diverge massively with regard to social protection spending. This paper investigates its causes by estimating random-effects models using time-series cross-sectional data (1995–2019) for twenty-three transition countries. We find that part of the divergence relates to the severity of the economic shock suffered in the first years of transition, as well as economic performance and participation in global trade in the subsequent years. Surprisingly, the degree of democracy is not related to welfare spending, but post-communist countries do spend more when their population includes a larger proportion of elderly people and when unemployment rates are higher.