Effect of Social Spending on Income Concentration: A Post-Keynesian Long-Term Perspective

In the literature, there is a widespread consensus regarding the negative relationship between public spending and inequality. However, there is a lack of studies addressing this relationship from a long-term perspective. This becomes particularly relevant in a context where social public spending has seen an increase in recent years, coinciding with a rise in income concentration. Employing a post-Keynesian approach that analyzes concentration from a functional rather than personal perspective, an econometric model with an endogenous structure was implemented using data from 62 countries. The results suggest that social public spending, as a redistributive policy tool, is not sufficient to alleviate inequalities in the long term. A positive long-term relationship is observed between social public spending and income concentration of the capitalist class, ranging between 0.10 and 0.17 percentage points. However, it is important to note that this relationship is more robust in OECD countries than in non-OECD countries. Trans-Abstract: Effect of Social Spending on Income Concentration: A Post-Keynesian Long-Term Perspective In the literature, there is a widespread consensus regarding the negative relationship between public spending and inequality. However, there is a lack of studies addressing this relationship from a long-term perspective. This becomes particularly relevant in a context where social public spending has seen an increase in recent years, coinciding with a rise in income concentration. Employing a post-Keynesian approach that analyzes concentration from a functional rather than personal perspective, an econometric model with an endogenous structure was implemented using data from 62 countries. The results suggest that social public spending, as a redistributive policy tool, is not sufficient to alleviate inequalities in the long term. A positive long-term relationship is observed between social public spending and income concentration of the capitalist class, ranging between 0.10 and 0.17 percentage points. However, it is important to note that this relationship is more robust in OECD countries than in non-OECD countries.