Financial resource of public social security expenditure, the rule of law, and economic inequality: international comparison of legal origins

Abstract

This study indicates that the strength of the rule of law affects social security expenditure and its financial resources. However, legal origins affect the strength of the rule of law. We use data from 36 member countries of the Organisation for Economic Co-operation and Development. The legal origins affect the rule of law and have different marginal effects on public financial resources. Further, social security expenditures have a correction effect on economic inequality. However, the marginal effect of the social security expenditure on economic inequality differs based on its legal origins. Increasing social security expenditure affects correcting economic inequality to elaborate concerning all legal origins. Particularly in countries that adopted French legal origins, high social security expenditure further improves economic inequality. In contrast, increases in social security expenditures of countries with English legal origins do not improve economic inequality to a large extent. The results of this study suggest that differences in legal origins result in various types of capitalism.