The Costs of Risk: Examining the Missing Link between Globalization and Social Spending

Comment on “Meeting the Social Policy Challenges Facing Korea”

ABSTRACTThe theories and evidence about relationships between democracy and social spending in Latin America are highly contested. A recent study shows that collective protest by organized labor effectively increases social security and welfare spending, whereas mass protest does not have comparable effects on human capital spending in Latin American democracies. This article reexamines the analysis and demonstrates that organized labor alone cannot sway democratic governments. Labor strikes require the synchronizing effect of mass protest to obtain government concessions. Only through concurrent episodes of mass protest can organized labor overcome the numerical disadvantage of pressing democratic government for social welfare spending. In understanding the relationship between labor protests and social welfare spending through the lens of insider-outsider dichotomy, it is critical to consider the synchronizing effect of mass protests. The findings remain robust with alternative measures of democracy and various model specifications.

ObjectivesTo assess the effect of social spending on population health.DesignMultivariate regression analysis was performed to investigate the relationship between age-standardised cause-specific mortality rates and social spending. Mortality data were collected...

Income inequality is critical to social justice, and in this context, social spending is seen as one of the main policy tools for ensuring equality in income distribution. This research focuses on the relationship between social spending and income inequality. It also examines the development of social security systems, the organization and objectives of various social security frameworks, and social security spending in different countries. In this context, the study aimed to examine the impact of social security expenditures on the Gini coefficient. The study compared various selected EU countries and Türkiye in terms of these expenditures. The study was conducted using Generalized Estimation Equations method. Data was obtained from reliable sources such as the World Bank, and the OECD. The Gini coefficient was used as an indicator of income inequality, and the share of public expenditures in gross domestic product was used as the independent variable. Control variables included direct tax rates, unemployment rates, per capita income, and inflation. The findings of the analysis reveal a significant relationship between social security expenditures and the Gini coefficient. In this context, the findings are consistent with the literature and indicate that social expenditures are a fiscal policy tool that has a welfare-enhancing effect on disadvantaged segments of society.

This chapter presents a multivariate time-series analysis of social welfare spending that compares Greece, Portugal, and Spain with other OECD countries, between the years 1960 and 1990. Included in this analysis are factors commonly found to affect social spending (e.g., per capita wealth and population age). These contributed to low levels of social spending in these three countries, but are insufficient to explain lagging program development. Three different measures of democratization, however, produce strong evidence that the authoritarian regimes of Spain and Portugal had seriously retarded program development, while the short duration of the “colonels' regime” in Greece had less of an impact. Indeed, the type of transition to democracy had a discernible impact on policy change: the Portuguese revolution was accompanied by immediate increases in social welfare spending; while the more gradual transition in Spain led to incremental policy change. In all three, democratization has allowed social welfare policies to converge on typical OECD levels over the following two decades.

This article analyzes the relationship between collective protest and social spending in Latin America from 1970 to 2007. I argue that under democracy, organized labor is in a better position relative to other groups in society to obtain social policy concessions as a consequence of their collective action efforts. Labor insiders mobilize around specific demands, and labor strikes carry significant economic and political costs on governments. In contrast, other groups in society rarely protest around specific social policy issues and are more often subject to successful demobilization tactics from political leaders. Results from an error correction model (ECM) show that in democracies, collective protest has differentiated effects on social spending. While strikes have a strong positive long-term effect on social security and welfare spending, none of the different forms of collective protest affect education or health spending. Importantly, I also find evidence of a deterrent effect of mass protests in democratic regimes; cutbacks in human capital spending are less likely as peaceful large-scale demonstrations increase.

The volatility impact of social expenditure’s cyclicality in advanced economies

Purpose This study investigates the impact of women's political and economic empowerment on social protection expenditures across 27 European Union countries (2006–2023). Design/methodology/approach Using fixed-effects panel regressions with Driscoll–Kraay standard errors, we explore both linear and conditional (interaction and non-linear) effects of selected dimensions of women's empowerment on shaping total social welfare spending and welfare-chosen functions. Findings Findings reveal subtle differences in the overall impact. When considering linear effects, greater women's political and managerial empowerment, and narrowing gender pay gap, are associated with increased total welfare spending, and health and elderly functions, while only the gender pay gap significantly explains spending on the family/children function. Uncovered U-shaped relationships suggest that political and economic women's representation must reach a threshold before exerting a positive effect on social spending. Moreover, political empowerment interacts significantly with income inequality, indicating that its effect is stronger in more unequal societies. Originality/value Overall, the study contributes to a more refined understanding of how political and economic empowerment influences welfare systems in diverse ways, highlighting the importance of considering empowerment as a multidimensional and context-sensitive factor in shaping inclusive and equitable social protection policies.

Many countries struggle with the question of appropriate social welfare spending. Here we test several hypotheses about the dynamics between social welfare spending and crime. We do so using pooled, cross-national time-series data. Our findings suggest that per capita social welfare spending is associated with lower rates of both theft and homicide. Time lagged analysis suggests that the current level of social welfare spending, not that of recent years, accounts for any possible suppression of crime. The data also suggest that, whereas high homicide rates do not appear to inspire increased social welfare generosity, lagged measures of theft rates are associated with subsequent increases in social welfare spending among high theft countries.

Effectiveness and Equity in Social Spending - The Case of Spain

Spain is experiencing sustained economic and social disparities in several areas. Social spending policies have a heightened responsibility to respond but are challenged by high public debt and pressures from an aging society. This study takes stock of the level and effectiveness of public social expenditure from a cross-country and macroeconomic view, complementing recent targeted spending reviews. The results suggest that social protection spending should aim to improve redistribution through better targeting the most vulnerable while more effective education and active labor market policies should aim to create more equal opportunities and income prospects. In some areas more fiscal resources are needed. But social spending alone cannot reduce inequality, and efforts also should be directed toward making the labor market more inclusive.

Economic growth of only 4.9% in Indonesia in the first quarter of 2016 cast doubt on the previous official target of 5.2%–5.6%. Given the lacklustre internal demand and dampening global outlook, whether the government can generate faster growth in the remaining months will depend on the extent to which its programs champion productive spending. The government’s response to stalling growth has focused on increasing infrastructure and social spending. In the face of budgetary constraints to financing such expenditures, initiatives to raise revenue and to improve targeting on social spending are taking place. On the revenue front, two initiatives are worth noting: the issuance of Law 11/2016 on Tax Amnesty and the amendment of Law 16/2009 on General Provisions and Tax Procedures. To improve the targeting of social spending, the National Team for the Acceleration of Poverty Reduction (TNP2 K) launched an updated Unified Database, which contains information on 24 million of Indonesia’s poorest households. Meanwhile, around 167 million Indonesians have registered for the National Health Insurance scheme. Yet any consolidation of social protection and insurance programs in Indonesia necessitates an understanding of long-run trends in population dynamics. In particular, understanding the trends and drivers of family change is pivotal to mapping key issues and challenges in President Joko Widodo’s continued push towards welfare reform. We outline key features of contemporary family change in Indonesia: a modest decline in average household size, an uncertain trend in age at first marriage, fertility rates that hover just above replacement level, an increasing tendency for women to ‘marry down’ in education, more interethnic marriages, and an upturn in divorce since around 2006. We note the implications of family change on future trends in population and the workforce, and their associated longer-term challenges for current social protection initiatives.

Shadow economy exists in any economy, having a substantial impact on legal economy. It can be conducted separately, but most often it brings about significant consequences to the economic order. It is, therefore, very important to identify the relationships among factors fostering shadow economy. The universal roots of shadow economy are generally recognised, but there is still a considerable area left to be explored. Even though much attention is paid to taxes as the main cause of shadow economy, few investigations have been dedicated to tax effectiveness in terms of social budget expenditure versus total budget revenue. The aim of the study was to investigate the dependence between social budget spending and shadow economy performance. The MIMIC approach was employed to assess the level of shadow economy in selected OECD countries. Furthermore, the correlation between overall tax burdens and shadow economy was estimated. Moreover, the correlation between social spending and tax burdens was assessed. The correlation value between overall social budget expenditure and shadow economy was calculated to be high, at –0.6682. This means quite a strong negative correlation. The higher level of social spending reduces shadow economy performance. However, the correlation level between overall tax burdens and shadow economy is positive, reaching the level of 0.4458. There is a very strong positive correlation between overall tax burdens and social budget spending, estimated at 0.8984. Based upon the results, it can be concluded that close attention should be paid to tax effectiveness and its relationship with shadow economy performance.

Preface 1. The welfare state: some neglected considerations 2. Theoretical perspectives on the welfare state 3. Social welfare spending in advanced industrial democracies 4. Social welfare spending and democratic political context 5. Economic growth, social welfare spending, and income inequality 6. Infant mortality, equality, and social welfare spending 7. Conclusions: the causes and consequences of the welfare state References.

Most of the middle‐income ASEAN member countries have extensively expanded their social protection and service systems during the past three to four decades. Recent studies on globalization have largely argued that increased exposure to the global economy strengthens the demand for social policy and spending to expand human capabilities. However, empirical tests on the effects of globalization on social policy have been inconclusive. It is shown in this paper that the effect of globalization on social policy and spending in ASEAN is conditioned by domestic political institutions. Greater openness to international trade, together with democratic openings, provides strong incentives for greater attention to social policy and issues. Further openness to intraregional and interregional trade and the strengthening of democratic institutions, therefore, could increase pressure on the human capital upgrading of ASEAN member countries.