The determinants of social spending in Spain, 1950-1980, Are dictatorships less redistributive?

Most of the studies about the welfare state have focused so far on the affluent democracies. However, poorer and non-democratic countries have deserved less attention. This paper provides new evidence on the evolution of social spending in both Spain and Portugal between 1950 and 1980. Since both of them were dictatorships throughout almost the whole period, that new evidence allows us to study the relationship between dictatorships and redistribution. In addition to the level of social spending and its distribution among different items, the way in which social spending is financed is also analyzed in this paper. More exactly, the ratio of social security contributions to social spending is used as an indicator of redistribution. The main findings of this paper show that besides economic and demographic factors (as the level of GDP and the ageing of population) political factors are key determinants of social spending and the way in which it is funded. During the time-period 1950-80 dictatorships had a negative effect on social spending, and were more prone to finance social protection via social contributions, which did not imply redistribution through government budgets. Therefore, in contrast to the political legitimacy theories and those theories neglecting the role played by political factors, we find that (at least in the southern-European periphery) dictatorships were less redistributive than democracies. On the other hand, this papers findings also suggest that, rather than provoking a race to the bottom or an increase in social spending levels, globalization favored the adoption of tax-funded systems instead of contributory programs.