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Southern Political Science Association

Politics and Social Spending in Latin AmericaAuthor(s): Evelyne Huber, Thomas Mustillo and John D. StephensSource: The Journal of Politics, Vol. 70, No. 2 (Apr., 2008), pp. 420-436Published by: Cambridge University Press on behalf of the Southern Political Science AssociationStable URL: http://www.jstor.org/stable/30218897 .

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PoliticsndSocialpendingnLatin mericaEvelyneuber niversityfNorth arolinat ChapelHillThomas ustillo ndiana

niversityt

IndianapolisJohn .Stephens niversityfNorth arolinat ChapelHill

We examine hedeterminants f ocialexpendituren an unbalanced ooled ime-seriesnalysis or 18 LatinAmerican ountries or the eriod 970 to 2000. This s the irst uch nalysis f pendingn LatinAmericancountries ith full omplement f regime, artisanship, tate tructure, conomic,nd demographicariables,making ur nalysis omparableo nalyses fwelfare tates n advancedndustrial ountries. emocracy attersin the ong unboth or ocial ecurity nd welfare ndfor health nd education pending,nd--in tark ontrastto OECDcountries-partisanship oesnot matter. ighly epressive uthoritarian egimesetrenchpending nhealth nd education, ut not on social ecurity.

Expenditures on social ecuritynd welfare,health, nd education re an essential art ofwhat governments o to enhance he quality

of ife f their itizens nd the human apital ase oftheir societies. ocial scientists ave developedstrong ody of theory nd evidence o understandsocial xpenditures s part nd parcel f welfare tatedevelopment. ost of this heory as been built onthe basis of studies of welfare tates n OECDcountries nd emphasizesmobilization f socialgroups nd the role of political arties nd institu-tions, longwith conomic nd demographic actors,as determinants f welfare tate formation. urcentral uestion s to what xtent his heory ravelsto different ontexts nd how t needs o be modifiedfor he tudy f ocial xpendituresn LatinAmerica.

Our focus n social xpendituresn LatinAmericais governed y the concern with building n extanttheory nd developingmid-range heories f welfarestate evelopment crossregions. n order o do so,we need to study egions hat exhibit ocial policy

regimes hat an be usefully omparedwith hose nOECD countries. nly n LatinAmerica o we findasearly s the 1970s ocialpolicy egimes ith longhistory hat overed majority f their opulationsagainst ocialrisks nd thus deserve o be concep-tualized s welfare tates. However,we emphasizethat here s great ariation n socialpolicy egimeswithin Latin America, anging rom Uruguay ndArgentina, here largemajority f the population

remains covered by social security chemes andenjoysdecent ducation nd health ervices, o ElSalvador nd Guatemala, here ocial ecurity chemesand quality ducation nd health arereach essthan40%of the population.

Similarly, ince heOECD welfaretate iteratureemphasizes olitical ariables-political arties, o-litical nstitutions federalism, orporatism), olicylegacies the emergence f stake holders n socialpolicy chemes)-we need to study regionwherethere s variation n these ariables nd they an bestudied ver significant eriod f time. For partiesand subnational evels f government odevelop ndshape politics, emocracy s a prerequisite. n thetwentieth entury, atinAmerica as the non-OECDregion with the most extensive xperience withdemocracy, oth full nd restricted emocracy. tthe ame ime, atinAmerica xperienced variety fnondemocratic egimes, romhighly epressive u-thoritarianism opopulist egimes ith uthoritariantraits. hus, Latin America rovides s with ome

comparability oOECDcountries, ut n contrast othe atter, atinAmerica lsoprovides reat ariationin regime orms.

In this rticle e suggest hefollowing heoreticalmodifications n theories f welfare tate develop-ment o adapt them o the study f socialexpendi-tures n Latin America: irst nd foremost, e needto incorporate egime form as an independentvariable. he countries ncluded n the major tudies

TheJournal f Politics, ol. 70,No. 2, April 008,Pp. 420-436 doi:10.1017/S0022381608080407@2008 Southern olitical cienceAssociation ISSN 0022-3816

420

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POLITICS AND SOCIALSPENDINGIN LATIN AMERICA 421

of OECDwelfare tates ave had uninterrupted em-ocratic ule ince WWII,whereas heLatinAmericancountries ave experienced eriods f more nd lessrepressive uthoritarianism nd full or restricteddemocracy. learly, e want o understand hether

and how these egime orms hapeocial

xpenditurepatterns.Second,we need to take nto account hat the

role of political arties may play out differently ndifferent conomic nd social structures nd in thepresence f different olicy egacies. arties ave beenshown o be the key factors haping he generosityand redistributive rofile f welfare tates n OECDcountries. atin American parties with the samegeneral alue commitments nd policypreferencesas their OECD counterparts, owever,may facedifferent onstraints, eading o different ffects nsocial xpenditure atterns. f particular mportanceare differences n the historical trength f democ-racy, ivil ociety, nd parties hemselves, hich nturn hapeddifferencesn the historical ormation fsocial ecurity ystems nd thus he policy egacies nterms f their distributional mpact nd clienteles.Also, the severity f economic pressures as con-stituted more mportant nfluence n social ex-penditures han n OECD countries.

Theorynd

HypothesesThere re only few tudies f the determinants fsocialexpenditures nd their omposition n LatinAmerica hat we might uild on (Avelino, rown,and Hunter 2005;Brown nd Hunter 1999,2004;Kaufman nd Segura-Ubiergo 001;Wibbels 006).Moreover, hey lluse a lagged ependent ariable rfirst ifferences or the dependent ariable.Thisessentially eansthat heir nalyses re analyses fchanges n spending rom ne year o the next.We,in contrast, re interested n the determinants f

long-term atterns f social expenditures hich reindicated y evels f expenditure. his choicemakesour analysis omparable o studies f social pendingin OECDcountries, hevast majority f whichuselevels s well. imilarly, e are nterested n the ong-run ffects fpolitical ariables.We would not xpectone year of democracy r of dominance of onepolitical endency r another n the egislature nd/or the executive o make a major difference n theformation f social policy.We have hown lsewherethat an extrapolation f short-term ffects o the

long-term reatlynderestimateshe

mpactfpolit-ical party dominance on expenditure atterns n

OECD countries Huber and Stephens 001, 77).What matters or he achievement f different evelsof social expenditures s the cumulative ecord ofdemocracy nd strength f different olitical orces.

Our theoretical oint of departure s the nsightof the welfare tates iterature hat

political owerdistributions nd nstitutions aveprofoundly hapedthe generositynd structure fwelfare tates n OECDcountries. rguably he most fundamental et of n-stitutions haping access to and the exercise ofpolitical ower s regime orm.Accessto power sbroader and more competitive nder democraticthan under uthoritarian egimes, nd the exerciseof power s more ccountable nder heformer hanunder the atter. Accordingly, e would expectde-mocracies o be more ikely o produce olicies hatbenefit road ectors f the population han uthor-itarian egimes.pecifically, eexpect positive ffectof democracy n social ecurity nd welfare xpendi-tures, s well s on health nd education xpenditures.

The question f the mpact f regime orms nsocial policy is not confined o the comparisonbetween democratic nd nondemocratic egimes.Not all nondemocratic egimes avethe same goalsand use the ame trategies nd tactics. n post-WWIILatinAmerica, ondemocratic egimes anged romreformist nd minimally epressivee.g.,Per6n n hissecond term, the Peruvian military overnment

under Velasco)to reactionary nd highly epressiveregimes the bureaucratic-authoritarian egimes fthe Southern one, e.g., Chileunder Pinochet, ndthe military egimes nd dictatorships n CentralAmerica).While the former egimes olerated ndat times ncouraged opular organization nd pro-tected r even ncreased ocial spending evels, helatter sed repression o weaken opularforces ndtheir apacity ochallenge he xisting ocioeconomicorder nd make claims on the state. They et realwagesdeteriorate nd reduced heresources evotedto satisfying opular laims.Accordingly, e wouldexpect negative ffect f highly epressive uthoritar-ian regimes n social expenditures. hen repressiveauthoritarian egimes re replaced by democraticregimes, he atter ace pending evelsdepressed arbelowwhat s acceptable o the voters. herefore, eexpect legacy f repressiveuthoritarianismhatwillfade ver ime.

Democracy s also a precondition or he emer-genceof strong arties nd pressure roups apableof shaping ublicpolicy. nly prolonged emocraticrule makes t possiblefor parties o consolidate s

organizations nd establish onnectionso civil oci-

ety. This s particularly ruefor parties epresenting


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422 EVELYNEHUBER, THOMASMUSTILLO,AND JOHN D. STEPHENS

the nterests f the underprivileged;hat s,parties fthe eft.Authoritarian egimesmay reate arties oprovide upport or he regime, ut n LatinAmericamost authoritarian egimes ctively uppressed heleft. emocracy lso allows or he trengthening f a

varietyf

groupsn civil

ocietyhat

epresentower

class nterests nd may ttempt o influence olicy.From heOECD welfaretate iterature e know

that he trength f party locswith ifferent orld-views, value commitments, nd constituencies scrucial or he mount nd structure f social xpen-ditures. ong-term ncumbency f left-wing artiesresults n generous, ighly nclusive, nd redistrib-utivewelfare tates, ith xtensive ublic rovision ffree r subsidized ocial services. ong-term ncum-bency f secular ight nd center arties esults nresidual, nongenerous welfare tates, with heavyreliance n means testing nd scanty inancing ndprovision f social services. ong-term ncumbencyof Christian emocratic arties esults n generouswelfare tates, ut with less nclusive nd redistrib-utive profile, nd with heavy reliance on privateprovision f publicly inanced r mandated ervices(Bradley t al. 2003;Castles1982;Hicks nd Mishra1993;Huber, Ragin, nd Stephens 993;Huber andStephens 001;Swank1992).

Thestrong ffects f ong-term arty ncumbencystem from hepursuit f policiesmotivated y dif-ferent ommitments o fundamental alues nd coreconstituencies. oth experts nd politicians laceparties n a left-right ontinuum efined rimarilyby their iews f the ocioeconomic rder Alcantaraand Freidenberg 001; Castles and Mair 1984;Coppedge 1997).Parties ompete on other ssues,of course, uch as urban versus ural, thnicity ndreligion, r authoritarianism ersusdemocracy, utthese other cleavagestructures ary considerablyacross ountries hereas he eft-right ivisionspres-ent verywherenWest uropean Lijphart 981) ndLatin American Alcantara nd Rivas 2006) partysystems.Parties f the eft re committed o the values fequality nd solidarity, r in operational erms ousing he tate oreduce nequality y ntervening nthe economy nd providing edistributive ransfersand social services. arties f the right ome n twovarieties-traditional nd liberal. Both kinds arecommitted o the valueof hierarchy, ut the tradi-tional onservatives ccept aternalism nd the use ofthe state o preserve he economic nd social order,whereas he iberals spouse ndividualism nd free-dom from tate nterference n the economy. noperational erms, oth kinds of conservatives se

the state to protect conomicwinners y keepingdirect axation ow and providing ew ransfers ndsocial services, r giving hem a nonredistributiveprofile. hristian emocratic arties re committedto an organicworldview, here he ommunity as a

responsibilityo

providefor all of its members,

working n the subsidiarity rinciplewhich holdsthat he tate nly teps n where he family nd thecommunity re unable to provide van Kersbergen1995).However, hey ary reatly n their ommit-ments to equality, articularly n Latin America(Mainwaring nd Scully 003).

Ofcourse, arties aveother alue commitmentsthat are relevant or social policy, particularly orhealth nd education olicy, uch s progress, evel-opment, nd nationalism, ut the commitments oprogress nd development re hared cross hepartyspectrum o a greater xtent han commitments oequality nd solidarity. herefore, o the extent hatthese other ommitments nfluence ocial expendi-ture policies,we would expect hem o work n thesame direction f ncreasing xpenditures n healthand education nd thus o reduce nterparty iffer-ences.The most relevant ifference etween artieswith respect o socialpolicy, nd in particular tsdistributive rofile, s their ocation n the eft-rightcontinuum.

A brief ustification f our focus on political

partiess in order,

giventhat some scholars have

argued hat parties n Latin America re compara-tivelyweak,have ittle rogrammatic ohesion ndonly hallow oots n civil ociety, nd relate o theirbase largely hrough lientelism e.g., Ameringer1992;Ames 1995;Mainwaring nd Torcal 2006).First, ocial science s cumulative nd we want tounderstand he kinds of effects arties aveon thesamekinds f policies nder different tructural ndhistorical onditions. econd, other scholars havedemonstrated hat t east y he nd of he wentiethcentury omeparties n someLatinAmerican oun-

tries learlymattered. una and Zechmeister 2005)have shown on the basis of elite and mass surveyevidence hat there s meaningful ariation crosscountries n their ample of the extent o whichparties ohere programmatically nd represent hevoters' policypreferences. oreover, olomer ndEscatel 2004)demonstrate n the basisof data fromLatinobarometer urveys rom 995 to 2002,for 17Latin American ountries, hat an average f 78%of citizens re able to placethemselves n a left-rightscale.Finally, cholars ave demonstrated he mpactof partisan references n policy ormation n LatinAmerica. ibson 1997)traces he onnection etween


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POLITICS AND SOCIAL SPENDING IN LATIN AMERICA 423

policy nd electoral oalitions n the shaping fmarket eforms,nd Murillo 2001)discusseshebehavior f abor nions nd partisan oalitionsnsuch eforms.

The bility f parties ith ifferent ositions nthe eft-rightcale oshape olicy naccordance iththeir nderlyingnd nduring alue ommitmentsnthe post-WWIIeriod as to be understood ithinthe ontext f economic evelopmenttrategies,hestructure f he abor market, ndpolicyegacies.heroots f the LatinAmericanocial ecurity ystemsare n the Bismarckianccupationallyasedmodel,later isseminated hrough he nternational aborOffice ILO). Socialsecurity chemeswere firstestablished orprivileged roups military, olice,judiciary,ivil ervants)nd ater xtended o crucialwhite ollar teachers, ank employees)nd blue

collar miners, ailroad orkers, ortworkers) ate-gories, nd finally o formal ector mployeesngeneral.n thepioneer ountries,his rocess eganin the 1920s nd cceleratedn the 1940s nd 1950s,linked o mport ubstitutionndustrializationISI).Asecond roup f ountries olloweduit ome wodecadesater, nd n the east developedountriescoveragef ocial ecuritychemesemained ighlylimited Mesa-Lago978, 989, -6).

The main political onstellationsnderwhichsocial ecuritychemes ere xpanded eyond riv-ileged roups onsistedf democraticegimesnderleft-leaningarties ith utonomousabormovements(factionsf he ColoradosnUruguay;LN nCostaRica), r regimes ith lose ies o organizedabor,democraticthe opular ront nd he Unidad op-ular n Chile), emidemocraticPer6n nArgentina),or authoritarianVargas n Brazil, RIin Mexico).Thedegree f fragmentationnd inequality f thesocial ecurity chemes aried, ut all systems adprivileged chemes or the military nd various

categories f civil ervants nd all of them wereoverall egressive.

In this ontext,he referencesf arties f he eftwere or radualxpansionf he ocial ecurityystem,first oblue ollarworkers nd then o those n theinformalector, longwith nification nd mprove-ment f he enefits nthe eneralystem.' arties fthe right referredoprotect ragmentationnd thebenefitsn the rivilegedystems,utreducingocialsecurity xpenditures as not a priority efore hedebt risis f he 1980s nd he pening f he LatinAmericanconomies. s long s ISI was pursued,socialecuritychemesor rivateector orkers erefinanced ainlyy mployeend mployerontribu-tions. ndeed,nseveralountriesmployerontribu-tions reached ather igh evels, omparable oEuropeanevels. he reasonwhy hiswaspoliticallyfeasible as that mployers,rotected yhigh ariffwalls, ere ble opass heseosts n o he onsumers.

Thedebt risis f 1982 nd he nsuing eoliberalstructural djustment olicieshanged he ituationradically. s protectionist arriers ere owered rremoved,mployersressed or lowering f theircontributionso social ecurity chemes. s unem-ploymentnd nformalizationpread, mployeeon-tributions nd coverage eclined, nd the socialsecurity ystems aced iscal rises, ggravatinghegeneral iscal rises aced y LatinAmericantates.Thus, eductionf ocial xpendituresngeneralndsocial ecurity xpendituresn particular ecamepriority or he ight. heChileanmodel f pensionprivatization-heavily romoted y the WorldBank-became he reform f choice or neoliberalson the ight.t s mportantokeep nmind, hough,that he ransition osts f uch eforms ere nd tillare ubstantial. ccordingly,ven adical hangesnthe ocial ecurity ystems id not translate ntoradicaloweringf xpendituresn the hort un.

The left rejected rivatization nd preferredreforms imed t the onstructionf unified ublicsystems ith trong asicbenefits. oreover, s theloss of formal ector mployment eft n increasingproportion f the populationwithout ocial ecuritycoverage nd as poverty evelsrose, expansion fnoncontributory ocialbenefits ssumed rowing ri-ority or he eft. However, eft nd right were ex-tremely onstrained n finding esources or socialpolicy. hus, he ctual olicy ifferences etweeneftand right oncerned he allocation f social securityexpenditures ore o than heir magnitude, nd weadopt a nondirectional ypothesis or he mpact fpartisan olitical trength n the egislature n theoverall mount f ocial ecurity ndwelfare pending.

1It s important o point out that ocialsecurity ystems avebeen regressive or hree easons. irst, here ypically ere/aredifferent rograms or different ategories f employees bluecollar, white collar, civil servants) nd sectors e.g., military,judges, university rofessors, ank employees)with differentlevelsof generosity f benefits, ith the more generous nesbeing ubsidized y general axes.Second,within ach schemebenefits end o be earnings-related. hird, ocial ecurity over-agefor he most art has been ied o formal ector mployment.Since hemain onstituencies f eft arties avebeenblue collarworkers nd the poor, or people in the informal ector, eftparties avepromoted eforms o unify rograms nd equalizebenefits, nd to include people in the informal ector byexpanding noncontributory ocial transfers nd health careprograms. ood examples f this re the eft f center artiesin Chile going ack o the UnidadPopular),Uruguay, nd CostaRica.


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424 EVELYNE HUBER, THOMAS MUSTILLO, AND JOHN D. STEPHENS

The reality f social security pending n LatinAmerica t the beginning f the twenty-first enturyis that t s still egressive.he bulk of social ecurityspending oesto pensions, nd the remainder o afew ther inds f ransfers uch s family llowancesand

maternityenefits. ocial assistance s grouped

with ocial ecurity nd welfare pending n our data,but t accounts or essthan 20%of the total n thiscategory nly.2 n the great majority f countriessocialsecurity overage emains onfined o formalsector mployees, hich means that often 0% to60%of the conomicallyctive opulation emainedexcluded. e Ferranti t al. (2004, 68-72), n a studyfor heWorld Bank, eviewed range f studies ndfound hat n most countries n Latin America heregressive omponents f social security pendingoutweigh rogressive omponents. indert, koufias,

and Shapiro 2005)confirm his ssessment n thebasis of their nalysis f microdata. CLAC (2002,28) similarly hows that social security pendingprovides reater enefits o middle nd upper trata.

There are a number f cash transfer rogramsthat re grouped under ocial security ut are notemployment-basednd earnings-relatednd are pro-gressive,uch s noncontributory ensions nd someconditional ash transfers. hey generally re highlyprogressive nd have additional beneficial ffectsinsofar s the conditions or receipt re school at-tendance nd

primaryealth are visits f children.

The conditional ash transfer rograms eviewed yMorley nd Coady (2003),however, re limited ncoveragend financing, eaching maximum f0.2%of GDP. Noncontributory, eans-testedocialassis-tance pensions re still relatively carce nd poorlyfunded s well Muller 005).In the past fewyears,under he eft-wing overnmentsn Brazil,Uruguay,and Chile, these programs have been expandedconsiderably. hey re clearly highly ffective eansto redistribute ncome nd reduce overty, ut n theperiod covered y our data they till ccount for

small ercentage f ocial ecurity nd welfare pend-ingonly.Nevertheless,here s considerable ariationin the allocation f social security nd welfare x-penditures etween ountries, nd indeed we havedemonstrated lsewherehat left-leaning alance fpower in the legislature s associated with owerincome nequality n Latin American nd Caribbeancountries Huber t al. 2006). fwehad a measure orthe overall istributive mpact f socialsecurity nd

welfare xpenditures, e would hypothesize pos-itive ffect f a left-leaning artisan alance, ut forthe overall evel of expenditures e adopt a non-directional ypothesis.

The development f health are ystems n LatinAmericas inked o the development f ocial ecurityschemes. n many cases,health are insurance asparalleled ocial security n the sense that part ofemployer nd employee ocialsecurity ontributionshavegone o health nsurance.n some ases, arehasbeenprovided y social ecurity linics nd hospitals,in other ases by private linics nd hospitals ndercontract ith he socialsecurity ystem, nd in stillothers y public clinics nd hospitals. ublichealthexpenditures ave ometimes ubsidizedocial ecurityhealth are and always upported ublicclinics ndhospitals nd preventive ealth ampaigns, nd in

somecountries ocial ecurity ystems aveprovidedhealth are on a noncontributory asis. n general, nlinewith he nterests f heir rimary onstituencies-bluecollarworkers nd the poor n the ase of eft-of-center arties, nd middle- nd upper-income roupsin the case of right-of-center arties-left arties avefavored n improvement f the public health aresystem nd right arties avefavored rivate rovi-sion and private r social security inancing. ow-ever,where ormal ector mployment ashigh ndsocial security inancing f health care had beenestablished or ome sectors f the work force, eft-of-center arties upported xpansion of employ-ment-based nsurance inked to private nonprofitprovision f care oreach irtually niversal overage(as in Argentina nd Uruguay).

The educational ystem n LatinAmerica howssimilar ombination f private nd publicprovision.At the primary nd secondary evel,private choolattendance-heavily nCatholic chools-has been henorm rather han the exception or hemiddle ndupper lasses.At the university evel, ublicuniver-sitiesplayed prominent ole. Catholicuniversities

have a long tradition, ut the proliferation f otherprivate niversities s a fairly ecent henomenon.Improvementsn public ducation ave been a con-sistent rogram oint f he eft, hereas heright assupported arents' hoice etween rivate nd publicschools-a choice heavily ontingent n income.

There are regressive omponents f health ndeducation xpenditures, ut in general heprogres-sive omponents end o outweigh heregressivenes(de Ferranti t al. 2004,263-64).Studies f differentprograms howthat xpenditures n tertiary duca-tion are regressive, hereas basic education andhealth ervices rovided y the public ector or he

2TheMF ourceseport he wo ypesf xpenditureseparatelyfor 79

ountry ears nly;n these bservations,ocial ecurity

accountsor 3%of he pending.


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POLITICS AND SOCIAL SPENDINGIN LATIN AMERICA 425

uninsured nd school nutritional rograms ave aprogressive ncidence e.g., Scott 2003 for Mexico;Wodon 2003).ECLACdata for ight ountries n theregion show that the most progressive ypes ofexpenditures re spending n primary nd secondary

education nd that public spending n health areand nutrition s the econd most rogressiveategory(2002, 26). Lindert, koufias, nd Shapiro 2005)conclude hat he bulk of education pending as agenerally rogressive rofile nd health pending asa slightly rogressive r neutral profile. hus, onbalance,we expect positive ffect f left-leaningdominance n the egislature n health nd educationexpenditures.

Federalism as been held responsible n OECDcountries or slowing he expansion f the publicsector n general nd the welfare tate n particular(Castles1999;Obinger, eibfried, nd Castles 005;Schmidt 1997).Federalism nd other nstitutionalarrangements hat provide veto points provide heopportunity or pponents f egislation o mobilizeattempts o block its passageand thus make theadoption-but also the curtailment-of mportantsocial policy schemesmore difficult Bonoli andMach2000;Hicks1999;Huber,Ragin, nd Stephens1993;Huber nd Stephens 001;Maioni1998; wank2002).

In general, ederalisms likely o have a stronger

impact on expenditure atterns nder democraticrule,when onstitutional rovisions re followed. thas the strongest otential o serve s a brake onexpansion r retrenchment f socialspending f therepresentatives f subnational nits have a share offormal nd real decision-making ower.However, tis theoretically ossible hat ubnational owerhold-ersunder uthoritarian egimesmayhavebargainingleveragewith he central overnment nd use thatleverage o extract ore esources rom he enter orsocialexpenditures. his would be particularly ikelyto occur under elativelypen,nonrepressiveuthor-itarian regimes, r authoritarian egimes that allowfor some kinds of elections. Accordingly, we inves-tigate the impact of federalism egardless f regimetype, as well as the impact of federalism nder de-mocracy only. Since our period of analysis, 1970 to2000, includes both phases when expansion and re-trenchment ere on the agenda (though more of thelatter), he positive and negative ffects ould coun-terbalance ach other and statistically his may resultin no significant ffects.

Our control ariables nclude economic and dem-

ographicfactors hat affect oth the needs for social

expenditures nd governmental apacity o meet those

needs.We expect positive ffect f GDP per capita,urbanization, nd the proportion f the elderly op-ulation n social ecurity pending n LatinAmericancountries. e also expect positive ffect f GDPpercapita, rbanization, nd size of the school ge pop-

ulation n health nd education pending. iven hecontradictory ature f findingsnprevious tudies, eadopt nondirectional ypothesisor he ffect f radeopenness n both types f spending.We expectnegative ffect f FDI on social ecurity pending ndapositive neonhealth nd ducation pending ecauseof the importance f human capital for employersneeding o be competitiventheworld conomy. iscaldeficits ooner r ater all for usterity olicies,ndwewould expect hem o have negative ffects n bothsocialsecurity/welfarend health/education xpendi-tures.We would lsoexpect resence f n MFagree-ment o be associated ith ower evels f both ocialsecurity/welfarendhealth/educationxpenditures.

If one considers rajectories f macroeconomicand fiscalmanagementn LatinAmerica ver he astthree ecades f the wentieth entury, t s clear hatthey went hrough hree learly istinct hases.The1970swere period f slowed rowth ut continuedexpansion f budgets ased on easyborrowing ninternational arkets. he 1980swere he period fthe debt risis, conomic ontraction, udgetary us-terity, nd reverse apitalflows rom atin America

to the creditor ountries. n the early 1990s thebudgetary onstraints ased as capital egan o flowback to Latin America nd economic growth e-sumed. Starting n the mid-1990s number offinancial rises ad regional ipple ffects nd slowedgrowth gain.Thesetrends ffected ll the countriesin the egion, hough ith omewhat ifferent imingand to different egrees. herefore, f we take the1970sas a baseline,we would expect a negativeperiod effect or 1982-89(the first nd last yearsforwhich he verage rowth ates n the regionwerenegative) n levels of socialspending. he expect-ations for the 1990s are more ambiguous; the 1990swere clearly n expansionary hase, but there was alot of ground to make up and it is not clear whethermost countries urpassed the levels of social expen-ditures of the 1970s.

Measures f the Dependent ndIndependent ariables

Our measures of socialspending

as apercentage

ofGDP are derived from everal sources (see Table 1).


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TABLE1 VariableDescriptions, ata Sources nd Hypothesized ffects or ocialSpending evels n LatinAmerica

Hypothesizedmpact:Social ecurity ealth

VariableDescription

& welfare education

Dependent ariablesSocialecurity welfare Social ecurityndwelfarependings a percent f GDP.a

spendingHealth education Health nd educationpendings a percent fGDP.a

spendingIndependent ariablesMethodologicalontrols

Data source ndicator Coded1ifCominetti1996)sthe ource or ealth nd +/- +/-spending ata,otherwise oded0.a

Debt crisis 1982-1989Recovery 1990-2000 +/- +/-

Logic f ndustrialismGDPper capita PercapitaGDPin thousands f 1995purchasing ower arity + +dollars.b

Urbanpopulation % of population iving n areasdefined s urban.' + +Agedpopulation % of population ge 65 and older.' +Youth population % of population ge 14and younger.' +

GlobalizationTrade openness Total exports nd imports s a percent f GDP.b +/- +/-Foreign irect nvestment Net nflows f foreign irect nvestment s a percent f GDP.' - +

inflowsDeficit Government eficit s a percentage f GDP.cIMF Scored for ach year country asrepurchasebligations

with he MF and 0 for ach year t doesnot, umulativesince 970.'Politicalactors

Democracy Cumulativeears f democracyrom 945 o the year f he + +observation.,

Federalism Argentina, razil, exico, ndVenezuelaoded s federal.a +/- +/-Democraticederalism Dichotomousndicatorsf federal emocracies. +/- +/-Repressiveuthoritarianismears f repressiveuthoritarianismn the revious years.,Legislativeartisan alanceCumulativendex f deologicalenter fgravityn the ower +/- +

house rom 945 o the year f he bservationsee ext).aExecutiveartisan alance Cumulativendex f deologicalenter f gravityn the +/- +

executiverom 945 o the year f he bservation(seetext).a

Sources:Huber t l. 2008; PennWorld able Version .1;CWorldank 2003)

The measure of social security nd welfare s from heIMF. The measure of health and education spendingcombines data from ECLAC, Cominetti (1996),ECLAC's SocialPanorama, and the IMF. The con-struction f the health and education series and themethodology or dealing with the varied sources areexplained in the appendix available at our web site(http://www.unc.edu/-jdsteph/index.html). ur de-tailed analysis of the sources showed that the Com-inetti health and education series was significantly

higher han the others, o a dummy variable for hatdata source is included in the analysis of health andeducation spending.

Our measure of democracy is based upon theclassification of regime types in Rueschemeyer,Huber Stephens, and Stephens 1992), updated ac-cording to those coding rules. Colonies and all kindsof authoritarian egimes are coded as 0, restricteddemocracies as .5, and full democracies as 1. Themeasure cumulates the annual series since 1945, to


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capture he trength f the democratic ecord n thepost-WWII eriod.3

We coded repressive uthoritarian egime s aseparate ategory, sing 1 for very ear where hecountry ad a repressive uthoritarian egime nd 0for very ear without uch a regime; uthoritarianregimes erecoded as repressive f they ommittedor tolerated widespreadhuman rights iolations.Yearly cores were cumulated ver the five yearsprior o the year f observation. e reason hat heeffects f authoritarian ule would fade throughtime.4 See AppendixTable 1 at http://www.unc.edu/-jdsteph/index.html or egime lassifications.)

Our political ariablesrederived rom oppedge(1997).In his project, e consulted ountry xpertsto classify olitical artieswhich ontested lectionsfor the lower house or constituent ssemblies n

11 countries f Latin America rom s far back as1912.5His classificationcheme ontains wo primarydimensions nd several esidual ategories. irst, tincludes left-right imension, efined rimarily nsocial and economic erms. He is concerned ithpolitical arty's deology nd class appeals nd withits relative rioritization f growth nd redistribu-tion. This dimension s divided nto five ategories:left, enter-left, enter, enter-right, nd right. ec-ond, t includes religious imension f two cate-gories, hristian nd secular. t distinguishes hosepartieswhichdo and do not base their deology rprograms n the Catholic Church, the Bible, orreligious hilosophy r seek to defend he nterestsof the Catholic hurch nd to reduce he eparationof church nd state. inally, is classification chemecontains hree esidual ategories: ersonalist, ther,and unknown. or our purposes, t is sufficient o

say hat hese esidual ategoriesll contain artiesthat re not classifiable ccording o left-right rChristian-secularriteria.

In two respects, e rather irectly dopted iswork. irst, e adopted is classificationcheme.6Second,n all but one case,weadopted isclassi-fication f parties or the country-yearshat fallwithin ur ample.We make ne revision: oppedgeclassifiedhe eronists fArgentinas other, hilewe classify hem s secular enter-left uring hedemocratic pisodes etween 945 and 1973;assecular enter uring he democratic ears rom1974 o 1989; ndas secular enter-rightrom 990onward.7

We usehis classificationcheme o expand hecoverageo the ull ange f ountries ndyears hatfallwithin ur nalysis.8fter lassifyingachparty,we summed he roportion f he eats eld y achcategory or ach country-year.9hisresults n 13annual eries seculareft, ecular enter-left,ecularcenter, ecular enter-right,ecular ight, hristianleft, hristian enter-left,hristian enter, hristiancenter-right, hristian ight, ersonalist, ther, n-known) or ach country. ach series ndicates heseat hare nthe ower ouse r constituent ssemblyheld y eculareft arties,ecular enter-leftarties,etc. During years which re nondemocratic,sdefined y our democracy ariable, ll categoriesare scored s 0. In our analyses ot only f socialspending ut lso of nequalitynd povertyHuberet al. 2006;Huber, ribble, nd Stephens006),wefound hat he eligiousimension asnot elated oany f the dependent ariables.hus,we combinedthe eligiousnd ecular ategories.ollowingusackand Fuchs 2002),we then calculatedegislativepartisan alancef oweror simplyegislativearti-san balance) yweightinghe eat hare n a givenyear f ach ategoryfparties y 1for ight, 0.5for enter-right,for enter, .5for enter-left,nd1for eft arties. or xamplenCostaRican1971,he

3We lso examinedmeasures eveloped yAlvarez t al.,FreedomHouse, ndMainwaringt l. Not urprisinglyllof hese re highlycorrelated, articularly ur cumulative ersions f the measures.Alvarez t al. (1996)ends n 1990 and Freedom ouse begins n1972, o these measures o not have sufficient overage or urpurposes. The Mainwaring t al. and Rueschemeyer, uberStephens, nd Stephens nnual measures re highly orrelated(.85)and the umulative ersions f the measures re very ighlycorrelated .95). Thus, it is not surprising hat substitutingMainwaring orRueschemeyerielded he ame results.

4For he hree olitical ariables e developed, nd experimentedwith, measures umulated ver four periods: 1945 to year ofobservation, nd the 15, 10, and 5 years receding heyear ofobservation. e selected he measure sed n the final nalysesfor theoretical easons democratic istory xpected o havelonger erm ffect) s well s empirical nes better erformancein regression odels).

5For general efense f he alidity f xpert urveysn assessingparty positions, see Steenbergen, Hooghe, and Marks(forthcoming).

6SeeCoppedge 1997)for detailed ategory escriptions; vail-ableat http://www.nd.edu/-mcoppedg/crd/criteria.htm.

7UsingCoppedge's odingof the Peronists id not change heresults f the nalysis.8Unlike oppedge 1997),we did not useexpert urveys.nstead,two members f our team ndependently onsulted umerousprimary nd reference aterials n order o code each politicalparty. hen, on parties orwhich herewas a disagreement, edid seek external xpert nput, nd finally he entire esearchteam onvened o make decision.

9Our procedure f tallying eat sharesdiffers rom Coppedge(1997),who talliedvote shares. We make this choice on thegrounds hat eat hares re more onsequential orpolicy hanvote hares.


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center-right roportion f egislativeeatswas .386,the center eft 579 and the left was .035. Thelegislative artisan alancewas (.386*-.5)+(.579*.5)+(.035*1)= .132.Finally, e cumulated heweightedvalue within ach series from 1945to the year ofobservation.We created cumulated measure ofexecutiveartisan alance n the ameway, ased onwhich arty ontrolled hepresidency.

We measure federalism with a dichotomousvariable.Brazil,Mexico,Argentina, nd Venezuelawere lassified s federal, nd the rest f he ountrieswere lassified s not federal. o test whether eder-alism only affected pending during periods ofdemocracy, e created n interaction erm n whichthe four ederal ountries ere oded as 1 in years nwhich heywere estricted r full emocraciesnd allother bservations ere oded as 0.

Fivevariables omprise ur measures f global-ization.Trade openness s measured s exports ndimports s a percentage f gross domestic roduct.Foreign irect nvestment easures net inflows finvestment s a percentage f grossdomestic rod-uct. We measure central overnment's eficit ysubtracting otal xpenditures rom otal evenues,sa percentage f grossdomestic roduct. inally, euse a dichotomy o measurewhether r not countryhasrepurchase bligations o the MFin a given ear.To derive ur independent ariable or MF influ-ence,we then cumulate he dichotomy rom 970.We also includedMorley,Machado, nd Pettinato's(1999) ndex f capital ccount iberalization,ut t sonly vailable or 62 of our 510 country ears.

We employ hree dditional conomic nd dem-ographic ontrols. irst, we use real grossdomesticproduct per capita, djusted for purchasing owerparities. econd, we include the percentage f thepopulation which s 65 and older for the modelpredicting ocialsecurity nd welfare pending, ndthe percentage f the population which s under15 years f age for the model predicting pending

on health and education. Finally, we include anurbanization ariable,which measures hepercentageof the population that ives n areas defined s urban.

Analytic echniquesWe use an unbalanced panel data set with 446 ob-servations rom 18Latin American ountries. Table 2lists the countries and the means of the dependentvariables and the number of observations for eachcountry. The data span the period 1970 to 2000.

TABLE MeanSocialSpending s a Percentage fGDP

Social ecurity Health ndand Welfare Education N

Argentina5.5 5.4 30

Bolivia 2.9 6.0 21Brazil 7.4 4.5 27Chile 8.7 5.9 29Colombia 1.8 5.6 11CostaRica 3.7 9.5 29DominicanRepublic 0.9 3.5 28Ecuador 0.2 4.6 18El Salvador 0.5 3.7 31Guatemala 0.6 2.6 27Honduras 0.7 6.0 24Mexico 2.9 5.5 27Nicaragua 3.0 5.8 15

Panama 4.5 10.0 21Paraguay 2.2 2.5 27Peru 0.9 3.8 23Uruguay 13.7 5.0 28Venezuela 1.8 5.4 30Allcountry ears 3.6 5.2 44610th ercentile 0.4 2.490th percentila 8.5 9.3

With few exceptions, he observations re annual.Hicks notes that errors for regression quations

estimated rom pooled data using OLS [ordinaryleast squaresregression] rocedures end to be (1)temporally utoregressive,2) cross-sectionally et-eroskedastic, nd (3) cross-sectionallyorrelated swell as (4) concealunit and period effects nd (5)reflect ome causal heterogeneity cross pace, ime,orboth 1994, 72).We follow eck nd Katz's 1995)recommended rocedure, sing anel-corrected tand-ard errors, orrections or irst-order uto-regression,and imposition f a common rho for all cross-sections. his procedure s implemented n version8.0of the Stata conometrics rogram. ince here ssometrend n our data, we do not nclude laggeddependent ariable s recommended y Beck andKatz (1996) because in this situation he laggeddependent ariable nappropriately uppresses hepower of other ndependent ariables, s Achen(2000)has shown.1'Beckand Katz (2004, 16-17)have shown that correcting or first rder utore-gression ctually oes include a laggeddependentvariable n the right and ideof the quation. hus,it does dealwith he problem f erial orrelation ut

'01n hese ata, he agged ependent ariable xplains 8%of hevariation n the dependent ariable.


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without, s our results how, uppressing hepowerof other ndependent ariables.

Beck nd Katz 1996)and others ave rgued orthe nclusion f country ummies n order o dealwith omitted ariable ias. Plimper, Troeger, ndManow(2005, 330-34) in their ecent reatment fthis ssue have countered hat nclusion f countrydummies oes much more than eliminate mittedvariable ias. It also (1) eliminates ny variation nthe dependent ariable hich s due to time nvariantfactors uch s difference n constitutional tructures,(2)greatly educes he oefficients f factors hat arymainly etween ountries, 3) eliminates ny differ-ences n the dependent ariable ue to differences ttl in the time eries, nd (4) completelybsorb(s)differencesn the evel of the ndependent ariablesacross the units 331, emphasis n the original).Elaborating n this ast point, hey rgue hat f onehypothesizes hat he evel of the ndependent ari-able has an effect n the level of the dependentvariables e.g., history f democracy nd level ofsocialexpenditures), a fixed ffects pecificationsnot the model at hand. If a theory redicts eveleffects, ne should not include unit dummies. nthese ases, llowing or mild bias resulting romomitted ariabless essharmful han unning fixedeffects pecification 334). We do hypothesize #1above)effects f time nvariant actors federalism),(#3) ffects n the evels f our ndependent ariablesprior o tl on the evel of the dependent ariable ttl, and (#4) effects f levels of the independentvariables n levels of the dependent ariable. naddition, ariation n severalof our independentvariables s primarily ross ectional #2). Thus, t sclear hat ixed ffects stimation r the nclusion fcountry ummies s not appropriate n this ase.

To checkour results or robustness, e reesti-mated ll of the models with OLS estimation f theregression oefficients, hich rovides onsistent s-timates f he egressionoefficients,nd robust-cluster

estimators f the standard errors. The robust-clustervariance estimator s a variant of the Huber-Whiterobust estimator that remains valid (i.e., providescorrect coverage) in the presence of any pattern ofcorrelations mong errors within nits, ncludingserial orrelation nd correlation ue to unit-specificcomponents Rogers1993).Thus the robust-clusterstandard rrors re unaffected y the presence funmeasured table country-specific actors ausingcorrelation mong rrors f observations or he amecountry, r for hat matter ny other form f within-unit error correlation. The robust-cluster stimatorrequires errors to be uncorrelated between lusters.

The latter ssumptionmight e violated f unmeas-ured factors ffect hedependent ariable n all unitsat the same point n time. Globaleconomic luctua-tions, uch s the debt risis eriod n Latin America,could produce such contemporaneous ffects. oevaluate he potential mpact of such unmeasuredperiod specific actorswe re-estimated he modelswith ndicator ariables or he debt risis 1982-89)and for he 1990s 1990-2000); hebaseline ategorycorresponds o 1970-81. The robust cluster OLSestimations ere ubstantially he same as the PraisWinsten stimations.We note below instances nwhich he obust luster stimations ndicate hat ursignificant esults re not robust.

Since the models n Tables 3 and 4 are GLSregressions,here s no conventional 2.The measurecalculated ythe Stata rogram omeasure oodnessof fits s a GLS pseudoR2. Given he ensitivity fthis statistic o the assumptionsmade in order tocalculate hem, ome nalysts onsider he OLSR2tobe a better ndicator f goodness f fit. We reportboth R2s.

Results

The results of regressions f social security ndwelfare pending n the independent ariables re

displayed n Table 3. Model 1 includes he controlvariables. odel2 adds he olitical ariables. odel 3substitutes xecutive artisan alance for egislativepartisan balance. Democracy s the only politicalvariable hat s significant nd correctly igned.Amovefrom he 10thpercentile o the 90thpercentileon democracy a move of 29.5 years)results n anincrease n social ecurity pending f 1.8%of GDP.While not very arge, his effect s not negligible,given sample mean of 3.6% of GDP. Repressiveauthoritarianism alls short of significance. othexecutive nd egislative artisan alance re negativeindicating that right-of-center egislatures nd gov-ernments ctually tend to spend more (or cut less)but both coefficients re insignificant. Federalismand the democracy-federalism nteraction erm arenot significant. he one control variable which isconsistently ignificant, ged population, is a verypowerful determinant f the level of spending on

Running hemodelswith ifferent ime eriods or he politicalvariables oes not change he results. ll periods for partisanbalance nd repressiveuthoritarianism emain nsignificant;heresults for democracy or 15 previous years are somewhatstronger ut for and 10 years re nsignificant.


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TABLE 3 Prais-Winsten stimates f Determinants f SocialSecurity nd Welfare pending

Variables Model1 Model ModelDebt crisis 1982-89) .266 (.227) .172 (.228) .209 (.228)Recovery 1990-2000) .370 (.332) .205 (.337) .278 (.334)GDP per capita -.102 (.164) -.171 (.167) -.162 (.170)Urban population .050* (.023) .033 (.030) .032 (.032)Aged population 1.283* (.298) 1.196*(.238) 1.205* (.255)Trade openness -.008 (.006) -.007 (.006) -.008 (.006)FDI .002 (.021) -.001 (.218) .000 (.021)Deficit -.007 (.016) -.011 (.016) -.010 (.016)IMF -.025 (.036) -.012 (.036) -.017 (0.38)Democracy .061 (.031) .054* (.032)Federalism .746 (.951) .775 (1.017)Democratic federalism .072 (.370) .077 (.373)Repressive uthoritarianism .124 (.139) .104 (.145)Legislativepartisan balance -.090 (.052)Executivepartisan balance -.026 (.037)

Common p .91 .88 .89Constant -4.354* (1.269) -3.835* (1.507) -3.641* (1.593)OLS R2 .68* .73* .72*Prais Winsten R2 .24* .31* .29*

*p < 05;two-tailed est penness, ederalism, emocratic ederalism,ecovery,nd partisanship; therwise ne-tailed est.N = 446

social security nd welfare. move from he 10thpercentile o the 90thpercentile n the percentage fthe agedpopulation a move of 5.5%)results n anincrease n social security nd welfare pending f

6.5%of GDP.In light f the amplemeanof 3.6%ofGDP,this s a very arge ffect. ndeed, he ero ordercorrelation etween he social security nd welfarespending nd aged percentage f the population s.79.

Theresults f regressions f health nd educationspending n the ndependent ariables re displayedin Table4. The models ontain he ame ndependentvariables s in Table3 except hat outh opulation ssubstituted or aged population. Democracy ndrepressive uthoritarianism re correctly igned ndsignificant. move from he 10th percentile o the90th percentile n repressive uthoritarianism fiveyears)results n a decrease n health nd educationspending f 1.3%of GDP;a similar hange n de-mocracy esultsn an increase n spending f 2.7%ofGDP.In light f samplemeanof 5.6%of GDP,this

is a substantivelyarge ffect.12 ederalism nd thedemocracy ederalismnteraction erm re not sig-nificant. oth egislative nd executive artisanshipare incorrectly igned nd the latter s significant.However, t is not significant n the robust lusterestimates, ndicating hat he finding s not robust.

GDP per capita is consistently ignificant ndcorrectly igned, ut ts ffect smodest: move romthe 10th percentile o the 0th percentile s associatedwith n increase n health nd education pending f1.4% of GDP. Government udget deficit s alsosignificant nd correctly igned.A move from he10th to 90th percentile n this variable esults n adecrease f 0.3% of GDP in health nd educationspending, surprisingly mall ffect.13

In contrast o the results or ocialsecurity ndwelfare pending, hedebt crisis ndicator s signifi-cant nd negative. llcountries xperienced ressuresto reduce expenditures cross the board in thisperiod. However, ocialsecurity nd welfare xpen-ditures eremore esilient hanhealth nd educationexpenditures.

12Runninghemodelswith ifferent ime eriods or he politicalvariables oes not change he results or repressive uthoritari-anism,which emains ignificant ut somewhat eaker or helonger eriods, nd partisan alance,which emainsnsignificant.Democracy, owever, alls hort f ignificanceor he 10- nd 5-year periods, but is significant or the 15-year eriod. Thisconsistent attern upports ur theoretical ontention hat t islong-term emocratic ule hat matters or olicy.

13Regressionsith he Morley,Machado,and Pettinato 1999)capital ccount iberalizationndex or oth dependent ariablescausedus to ose 148cases, nd the ndex wasnot ignificant,owe are not ncluding hemodels n the ables.


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TABLE Prais-Winsten stimates f Determinants f Health nd Education pending

Variables Model1 Model Model

Debt risis 1982-89) -.406* .217) -.439* .207) -.462* .206)Recovery1990-2000) -.225 (.316) -.460 (.298) -.497 (.294)

Datasourcendicator .994*.312) 1.076*.333) 1.055*.329)GDPper apita .231 .109) .236*.100) .200*.099)Urban opulation -.002 (.023) -.019 (.023) -.010 (.023)Youth opulation .032 .066) .101 .067) .122*.068)Trade penness .002 .006) .006 .006) .003 .006)FDI -.250 (.028) -.024 (.031) -.024 (.030)Deficit -.041* .015) -.039* .015) -.040* .015)IMF .147^.035) .121^.030) .135^0.32)Democracy .090*.026) .085*.025)Federalism .149 .683) .287 .697)Democraticederalism .549 .356) .593 .356)Repressiveuthoritarianism -.259* .077) -.226* .080)Legislativeartisan alance -.091 (.060)

Executive artisan alance -.106^ (.042)

Constant 1.419 3.900) -1.131 3.973) -2.206 3.905)Common .87 .81 .81OLSR2 .37* .52* .53*PraisWinsten 2 .23* .31* .32*

panelcorrected tandard rrors n parenthesis* p < 05; significantut sign f coefficient pposite f directional ypothesis;wo-tailed estdata source, penness nd federalism;

otherwise ne-tailed est.N = 446

Discussion and ConclusionsOur main findings f theoretical nterest re thatregime forms re important eterminants f theamount governments pend on transfers nd socialservices. emocracymatters n the ongrun for othsocial ecurity nd welfare, nd health nd educationspending. These findings uggest hat democraticgovernments f all political tripes re more respon-sive o demands or tate rovision f social ecurityand welfare, nd for health nd education ervices

than are authoritarian overnments. ighly epres-siveauthoritarian egimes eep spending n healthand education ow. nterestingly, hey o not have asimilar ffect n social ecurity nd welfare pending.

Partisanship oes not matter for the overallamount of social expenditures. he difference e-tween governments f varying olitical colors isapparently ot in how much they pend, but inhow they llocatewhat they pend. We have qual-itative vidence hat eft-of-center arties have fa-vored programs with progressive rofiles, uch as

noncontributorynd conditional ransfer

rogramsand school feeding rograms nd preventive ealth

care (e.g.,the Unidad Popular n Chile, he PT inBrazil, the FA in Uruguay), nd we know fromquantitative tudies that a left-leaning alance ofpower n egislaturessassociated ith ower nequal-ity Huber et al. 2006),which eads us to infer hatleft governments ind t difficult o increase heoverall mount f social expenditures ut are moresuccessfuln shaping xpenditure atterns.14

Our data do not llow us consistently oseparateout progressive rom egressiveinds f xpenditures.For the restricted et of observations orwhich heIMF

provided igures or social security eparatelyfrom welfare xpenditures 120 observations or 13countries, irtuallyxclusivelyor he period 972-82),the results f our analyses howed he expected at-tern of partisanship. emocracy emained ositiveand significant orboth kinds of expenditures. helegislative artisan alancewasnegative or he om-binedmeasure which s dominated y ocial ecurityspending) nd for ocial ecurity pending lone, nd

14The attern f ocial xpendituress not he nly actor hapingincome istribution, f course. eft overnments ave lso made

use of other policies o protect ower ncome groups, uch asimprovementsn labor egislation nd the minimum age.


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both effects ere ignificant, nd it waspositive orwelfare pending, ut not significant.

Frommany tudies oneby nternational rgan-izations cited above) we know that most socialsecurity chemes n LatinAmerica t the beginningof the

twenty-first enturyre

highly egressive.eft

of center overnments ere hardly n power ongenough during the formative ears of the socialsecurity chemes o shape them nto redistributiveinstruments riginally. n the 26 years rom 945 to1970,our data show only one country, ruguay,where parties of the left nd center eft ogetherheld n average f lightly ore han 0%of seats ascoreof 14,with 13constituting he50%mark). nVenezuela nd CostaRica, hey veraged bout 40%,and in Chile about 30%.15Once the socialsecurityschemeswere stablished, hey reated ntitlements,and it becamevery ifficult or eft f center overn-ments o reallocate esources rom rivileged o thegeneral ocial ecurity chemes r from ocial ecurityto welfare xpenditures.

Unfortunately, here re no conclusive tudies fthe distributive mpact f socialsecurity chemes sof the ate 1970s, efore heonset f the debt risis. tis safe o assume hat heywere ess regressivet thatpoint n time n countries ith trong mport ub-stitution ndustrialization, articularly rgentina ndUruguay where the formal ector was large and

unemploymentas

veryow. n the wake f the debt

crisis nd structural djustment, he size of the n-formal ector rew ignificantly, hichmade he ocialsecurity chemesmore regressive verywhere.n thatsituation, eft-leaning overnments ere held backby economic onstraints n their fforts o increaseexpenditureso mprovend xpand he eneralchemesto cover he growing nformal ector.

There s further vidence or he high esiliencefsocial ecurity xpenditures. either he ndicator orthe debt crisis nor government eficits epressedsocialsecurity xpenditures, hereas hey oth had

significant egative effects n health and educationspending. The same is true for highly repressiveauthoritarian egimes; they were generally eluctantto make major cuts n social security chemesbut notso in health and education expenditures.

Our analysis shows that for social security ndwelfare pending, demographics re crucial. Once thesocial security chemes are put into place, they reateentitlements hat re difficult o change, nd expen-

ditures rowwith he growth f entitled roups. hemost plausible xplanation s the political ost ofcutting ntitlements, ut the egal nchoring f ocialsecurity chemes rguably ontributes o their esil-ience. Other rights re legally nchored s well--

prominently mongthem the

rightto

publiceducation nd health are-but they do not carrythe amequality f personal ntitlement. oreover,declines n quality f education nd health ervicesare not experienced s immediately nd starkly sdeclines in social security enefits. ince socialsecurity chemes rimarily enefit he more privi-legedand more organized roups, uts would affectthe more politically rticulate nd influential. heexamples f Uruguay nd Argentina how he poten-tialof arge-scale ensionermobilizationn defense ftheir ntitlements ery learly.

Spending on health and education s moresusceptible o economic and political constraintsand opportunities han pending n social security.Again, long record f democracy rives p healthand education pending, nd the effect s strongerthan for ocial security nd welfare pending. incewe know that ignificant ectors f the middle ndupper classeshave opted out of the public systemsand that on average verall atterns f health ndeducation pendingwere lightly rogressive y thelate 1990s,we can attribute herelationship etween

democracynd

spendingo the

opportunitieshat

democracy pens for the self-organization f theunderprivilegednd their apacity opush for etterhealth and education services. Highly repressiveauthoritarian egimesgenerally rush ower classorganizations nd thus their bility o push for x-pansion or resist urtailments f health nd educa-tion services. he fact hat highly epressive egimeskeep spending n health nd education ow but noton socialsecurity an in part be explained y theseregimes' redisposition o target hysical, egal, ndeconomicrepression t the ower lasses nd blue-

collar unions, he main users of public health ndeducation ervices, nd their eluctance o take onmiddle and upper middle classes, he dispropor-tionate beneficiaries f social security chemes. npart t can also be explained y the probability f astronger eaction cross the board against uts insocial ecurity han gainst eclines n the quality fhealth nd education ervices, nd the possibility fbroad opposition oalition ormation.

The stronger mpact of economic factors nhealth nd education pending han n social ecurityand welfare pending s underlined y the positiveeffect f GDPper apita n the former nd the ack f

15Keepn mind hat arties nly eceivecores or emocratic

periods;n nondemocratic

eriods,e

obviouslyouldnot

expecteft arties o nfluenceocial olicy ormation.


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such an effect n the latter. The fact that moreaffluent ountries evote greater hare f resourcesto health nd educationmaymean hat reater vail-ability f resources acilitates evoting greater hareto these urposes, r t maymean hat ountries ithbetter upported ealth nd education ystems avestronger uman capital base and thus are moresuccessful conomically. udget eficits nd the debtcrisis lso had a constraining ffect n health ndeducation xpenditures,n contrast o their ffect nsocial ecurity xpenditures.

Asnoted, heprevious tudies f social expendi-ture n LatinAmerica re not really omparable oours, ecause hey re tudies f hange nd not evelsof expenditures nd only Kaufman and Segura-Ubiergo 2001)include measure f political owerdistributions, hepolitical rientation f presidents.

However, heir tudy s frequently ited,which allsfor a brief discussion. here are three differencesbetween aufman nd Segura's nd our own coding.They odedpolitical rientation f presidents egard-less of whether he president was democraticallyelected r not,16 nd we coded the political rienta-tion ofparties epresented n parliament, s well s ofpresidents, nly during emocratic eriods. econd,they used a dichotomous oding of popularly ri-ented/popularly asedor not, whereas e used a left/center/right oding, s explained bove.Third, heycoded the orientation n the basis of the foundingcoalition r constituency f the party nd continuedto codeparties he amewayfor heir wholehistory,whereas we followed he conventional oding inOECD studies nd Coppedge's coding that allowfor hanges n classificationn the eft-right cale fparties hange heir asic orientation owards heiroriginal onstituency nd priorities f growth ndredistribution.

Kaufman nd Segurafind hat change owardspopulist presidents but not incumbency he yearbefore) s positively ssociatedwith hange n social

security nd welfare pending nd negatively ssoci-ated with hange n health nd education pending.They nterpret his s attempts ypopulist residentsto protect ension pending t the xpense f nvest-ment n human capital (2001, 580). This interpreta-tion is compatible with our interpretation hat healthand education spending is more vulnerable thansocial security nd welfare spending. They furtherfind that both democracy he year before the obser-

vation nd change owards emocracy s negativelyassociated ith hange n spending n social ecurityand welfare, nd democracy heyear before s pos-itively ssociatedwith hange n spending n healthand education s a percentage f GDP. The latterfinding s compatible ith urs.

Our results ontrast tarkly ith hose f studiesof welfare tates n OECDcountries, here artisan-ship has figured rominently. n addition to thestructural nd historical ifferenceso whichwe willreturn momentarily, e can point to differences nthe time periods coveredby these studies o helpexplain his ontrast. tudies f OECDcountries yp-ically nclude he Golden Ageof postwar apitalism,the period betweenWorld War II and the first ilshocks, long with the period of slowed growth,globalization,nd fiscal ressures n the welfare tate

beginning n the 1980s. There s some disagreementoverwhether artisan ffects isappearedn the atterphaseor whether hey ersist, ut there s agreementthat they have weakened under the political on-straints f entitlements nd economic onstraints nexpenditure ncreases. ue to data availability, urstudy f LatinAmerican ountries anonly over heperiod ince he 1970s, hat s,a period f significantfiscal constraints esulting rom lowed economicgrowth, hedebt risis f the 1980s nd the volatilityof he1990s. hese onstraints anhelp oexplain heabsence f partisan ffects.

The major reasons or he weakness f partisaneffects, hough, re tructural nd historical n nature.Asnoted, arties f the eft weregenerally oo weakto shape social security ystems n their formativeperiod,which n turn an be linked o the weaknessof the record of democracy tself. arties of thedemocratic eft and center ended to suffer romprohibition nd even persecution uring many u-thoritarian eriods, s did their upport roups ncivil ociety, rominently mong hem abor unions.Thus, they ntered emocratic eriods s relatively

weak actors. A comparison ith Western uropeanleft f center arties,with heir lose links o civilsociety rganizations nd policy think anks, llus-trates his weaknesswell.As the democratic ecordgets onger, nd if left-leaning arties long withother emocratic nstitutions anage oconsolidate,we should xpect tronger olitical ffects n socialpolicy also, particularly f the region experiencesgreater conomic tability nd growth hanover hepast 25years.

If we keep n mind that left-leaning artisanbalance oesdepressnequality ver he onger un, heabsence f partisan ffects n the evel of spending

16Thus,heir nalysis, hich egins n 1973, ncludes hemilitarypresidencies f 1973-75 n Peru nd of 1973-79 n Ecuador, ndall Mexican residents ince 1973.


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suggests hat left-of-center arties have found itdifficultoraise ew evenuen n economicnviron-mentwhere oth financial nd human apital rehighly oncentrated,ighly obile,ndpoliticallyn-fluential,nd hat hese artiesnstead ush ochangethe tructure f pendingomake tmore rogressive.They lso eekegalnd egulatoryhangesopromotethe nterests f he nderprivileged.n the est f llcases,onger ecordsf democracy ill e accompa-nied y strengtheningf oliticalarties, articularlythose epresentinghe nderprivilegednd ommittedto redistributive ocialpolicy nd investment nhuman apital, hich ould ut nmotion virtuouscycle mong emocracy, uman apital, conomicdevelopment,ndhuman elfare.

AcknowledgmentsWe acknowledge he support of National ScienceFoundation rant #SES-0241389. e would lso iketo thank lexander icks,Robert aufman, ictoriaMurillo,Kurt Weyland, nd the participants n theComparative oliticsWorking roup t the Univer-sity f North Carolina,ChapelHill, for commentson previous rafts. uber and Stephens hank heHanse nstitute orAdvanced tudy n Delmenhorst,Germany, or upport nd a stimulating nvironmentin which o work on this tudy, s well as UNC-

ChapelHill for esearch nd

studyeaves.

Manuscript ubmitted 8August 006Manuscript ccepted or ublication September 007

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Evelyne uber s Morehead lumni rofessor fpolitical cience,University f North Carolina at

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