Dynamics of social protection spending in the post-communist countries of Eastern Europe and the former Soviet Union: an enduring legacy of the transition shock?

ABSTRACT

The post-communist countries diverge massively with regard to social protection spending. This paper investigates its causes by estimating random-effects models using time-series cross-sectional data (1995–2019) for twenty-three transition countries. We find that part of the divergence relates to the severity of the economic shock suffered in the first years of transition, as well as economic performance and participation in global trade in the subsequent years. Surprisingly, the degree of democracy is not related to welfare spending, but post-communist countries do spend more when their population includes a larger proportion of elderly people and when unemployment rates are higher.

KEYWORDS:

• Post-communist countries
• social policy
• welfare spending
• transition shock
• political economy

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Unfortunately, this study does not specify how many (or which) post-communist countries were included in the analysis.

2 The notable exceptions were unemployment benefits in Slovenia and social assistance transfers in Hungary (Noelke 2008).

3 However, rather than ascribing his findings to the compensation hypothesis, Cameron argued that small, open economies have a higher degree of industrial concentration in terms of small numbers of companies accounting for large proportions of production and employment. This is conducive for the political mobilization of workers, which eventually leads to the expansion of the public proportion of the economy.

4 These include: Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Croatia, Czechia, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Ukraine, and Uzbekistan.

5 That the test is close to significance could indicate that small correlations between predictors and country effects exist. However, the possibility of a small amount of bias in the random effect estimators can be considered preferable to unbiased fixed effect estimates, given that efficiency gains in the former lead to a reduction of variance in the estimates See Clark and Linzer (2015).

6 For example, in 2017, the average ratio of international trade over GDP was 112% in our sample, whereas the global figure was 58%.

Additional information

Notes on contributors

Dimitri Gugushvili

Dimitri Gugushvili is a post-doctoral researcher at the Centre for Sociological Research (CESO) at KU Leuven, Belgium. His current research interests include public attitudes towards social and environmental issues, post-communist welfare systems, determinants of welfare spending, and redistributional effects of universal and means-tested social policy measures. Dimitri’s research has been published in various well-known academic journals, such as Social Policy and Society, Global Social Policy, Acta Politica, Journal of International and Comparative Social Policy and Problems of Post-Communism.

Bart Meuleman

Bart Meuleman is Full Professor at Centre for Sociological Research, KU Leuven. His research focuses on cross-national comparisons of value and attitude patterns, such as ethnic prejudice, egalitarianism and support for the welfare state. He has a special interest in the application of multilevel modeling and structural equation modeling on comparative survey data. Bart is vice-president of the European Survey Research Association (ESRA), member of the Methodology Group of the European Values Study and was invited to teach methodological courses at several institutions across Europe. His research was published in, among others, Annual Review of Sociology, Social Science Research, European Sociological Review, Public Opinion Quarterly, Journal of Cross-cultural Psychology and Journal of European Social Policy.