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Original Articles

Demographic, political, institutional and financial determinants of regional social expenditure: the case of Spain

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Pages 920-932 | Received 06 May 2015, Accepted 11 Jan 2016, Published online: 11 Apr 2016
 

ABSTRACT

Demographic, political, institutional and financial determinants of regional social expenditure: the case of Spain. Regional Studies. This paper contributes to the literature on the determinants of regional social spending using a dataset of the 17 regional governments in Spain. With both a fixed-effects static and a dynamic model, results suggest that demography, inputs, institutional design and resources are critical in determining the size of regional social budgets. Empirical evidence was found about the existence of economies of scale, but social services do not seem to follow a luxury-goods pattern. Left-wing governments seem to spend more, while federal regulations work as constraints of regional autonomy. Finally, strong evidence that the ‘foral’ system of regional financing is creating horizontal inequalities in the access to essential public services was found, while the common regime seems to be working well enough.

摘要

区域社会支出的人口、制度与金融决定因素:西班牙的案例。区域研究。本文运用西班牙十七个区域政府的数据集,对于区域社会支出的决定因素之文献作出贡献。研究结果同时在固定效应的静止与动态模型上,显示人口、投入、制度设计与资源,是决定区域社会预算规模的关键。本研究发现规模经济存在的经验证据,但社会服务似乎并未沿着奢侈品的模式。左翼政府似乎支出更多,而联邦法规则作为区域自主性的限制。最后,本研究发现强健的证据,支持区域金融的“法典惯例”系统在获得关键公共服务上,正在创造水平的不均等,而共同体制则似乎运作良好。

RÉSUMÉ

Les déterminants démographiques, politiques, institutionnels et financiers des dépenses sociales régionales: étude de cas de l’Espagne. Regional Studies. Partir d'un ensemble de données auprès des 17 administrations régionales en Espagne, cet article contribue à la documentation sur les déterminants des dépenses sociales régionales. Employant à la fois un modèle statique à effets fixes et un modèle dynamique, les résultats laissent supposer que la démographie, les inputs, le schéma institutionnel et les ressources disponibles sont d'une importance primordiale pour la détermination de la taille des budgets sociaux régionaux. Il s'est avéré des preuves empiriques à propos de la présence des économies d’échelle, mais il semble que les services sociaux ne suivent pas de tendance en faveur des produits de luxe. Il paraît que les partis de gauche au pouvoir dépensent plus d'argent, alors que la réglementation fédérale entrave l'autonomie régionale. Finalement, il s'est avéré de fortes preuves que le soi-disant système ‘foral’ de financement régional (qui a rapport aux droits et aux privilèges historiques de certaines régions d'Espagne) crée des inégalités horizontales pour ce qui est de l'accès aux services publics essentiels, tandis que le régime général semble fonctionner assez bien.

ZUSAMMENFASSUNG

Demografische, politische, institutionelle und finanzielle Determinanten der regionalen Sozialausgaben: der Fall Spanien. Regional Studies. Dieser Artikel ist ein Beitrag zur Literatur über die Determinanten der regionalen Sozialausgaben auf der Grundlage eines Datensatzes der 17 Regionalregierungen von Spanien. Die auf einem statischen Festeffektmodell sowie einem dynamischen Modell beruhenden Ergebnisse lassen darauf schließen, dass die Demografie, die Inputs, der institutionelle Aufbau und die Ressourcen von zentraler Bedeutung für die Größe der regionalen Sozialetats sind. Empirische Belege lassen auf die Existenz von Größenvorteilen schließen; allerdings scheint das Sozialwesen nicht dem Muster von Luxusgütern zu folgen. Linke Regierungen scheinen höhere Ausgaben zu tätigen, während die Vorschriften auf föderaler Ebene die regionale Autonomie einschränken. Schließlich weisen starke Belege darauf hin, dass das 'forale' System der Regionalfinanzierung horizontale Ungleichgewichte beim Zugang zu wesentlichen öffentlichen Leistungen verursacht, während das gemeinsame Regime ausreichend gut zu funktionieren scheint.

RESUMEN

HERRERO-ALCALDE, A., & TRÁNCHEZ-MARTÍN, J. M. Determinantes demográficos, políticos, institucionales y financieros del gasto social regional: el caso de España. Regional Studies. Este artículo es una contribución a la bibliografía sobre los determinantes del gasto social regional a partir de una base de datos de las 17 administraciones autonómicas españolas. Con ayuda de un modelo estático de efectos fijos y un modelo dinámico, los resultados indican que la demografía, los inputs, el diseño institucional y los recursos son fundamentales a la hora de determinar el tamaño de los presupuestos sociales autonómicos. La evidencia empírica nos indica la existencia de economías de escala, no obstante los servicios sociales no parecen seguir un patrón de bienes de lujo. Parece que las administraciones de izquierda gastan más, mientras que las regulaciones federales funcionan como limitaciones de la autonomía regional. Finalmente, pruebas contundentes demuestran que el sistema foral de la financiación regional está creando desigualdades horizontales en el acceso a los servicios públicos básicos, mientras que el régimen común parece que funciona suficientemente bien.

ACKNOWLEDGEMENT

The authors are thankful to Ramón Mahía Casado for his suggestions which improved the paper.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

SUPPLEMENTAL DATA

Supplemental data for this article can be accessed at http://10.1080/00343404.2016.1146822

Notes

1. Qualifying one service as ‘essential’ implies that a net equalization scheme will be applied. As a result, all territories should enjoy the same amount of (potential) resources for the provision of healthcare, education and social services.

2. Those differences could be one reason behind decreasing citizen satisfaction with the decentralized National Health Service (Antón, Muñoz de Bustillo, Fernández, & Rivera, Citation2014).

3. Although gender might also be expected to affect the public services demand pattern, significant inter-territorial differences in the weight of men and women in the total population should not be expected. Therefore, this variable is not likely to have explanatory power on the territorial distribution of social expenditure.

4. The level and evolution of sub-central expenditure can be also affected by regional legislation on budget stability, but this would be a case of regional governments exerting their own autonomy, while in the case of federal laws sub-central autonomy is restricted.

5. The main characteristics and findings of the literature referenced in this section are summarized in Tables A1 and A2 in Appendix A in the supplemental data online.

6. Although the Basque Country and Navarre have regulatory powers at all charter taxes, indirect taxation is subject to European regulation limitations.

7. For a simulation, including the ‘foral’ territories in the common financing system, see García, Herrero, Loscos, Ruiz-Huerta, and Vizán (Citation2013), who suggest that those two regions enjoy approximately twice as many resources than common ones.

8. The system in effect until 2009 is fully explained in López-Laborda and Monasterio (Citation2007) and Ruiz-Huerta and Herrero (Citation2008).

9. Expenditure needs are assessed based on the share of the total population (30%), regional land (1.8%), population dispersion (0.6%), the equivalent population covered by the National Health System (38%), the population over 65 (8.5%) and the population under 16 (20.5%)

10. In line with the content of note 3 above, a variable addressing the existence of regional budget constraints due to sub-central legislation has not been included in the estimations because, to the authors' knowledge, no such legislation exists that increases the European and federal budget stability requirements in Spain.

11. Adjusted population is a variable constructed with the number of residents of each territory, adjusted with the regional share of some indicators such as regional land, population dispersion, population covered by the National Health Service, population over 65 and population under 16.

12. All collections regarding taxes over which regional governments enjoy regulatory powers were included with a normative approach (the Ministry of Treasury publishes those potential collections). The reason for doing so is that using real collections would allow this variable to be used as a control, but not to test Hypothesis 6, because it would include those resources that are the result of regional decisions at the level of the fiscal effort required from citizens and at the level of tax administration efficiency.

13. It is important to note that given that some territories had already been implementing healthcare services for several years, some of their physical inputs could be the result of regional decisions, and therefore not inherited within the devolution process. However, no statistical information is available that would allow one to distinguish those two groups. Nevertheless, a strong inertia can be expected in the evolution of inputs if the architecture of the regional financing system is considered.

14. As already noted, 2002 was the first year in which all regions implemented ‘essential public services’. The year 2012 is the last for which statistics are available.

15. Additional information about all the variables and the results of all estimations are given in Tables A3–A11 in Appendix A in the supplemental data online.

16. It has not been the only determinant of the institutional crisis with this territory, others being the existence of the foral regime and several other political drivers, to name a few.

17. Nevertheless, this last result does not imply that inter-territorial inequalities in regional public services do not exist. Due to the essential nature of healthcare, education and social services, it could be that those regions with a lower level of resources would be forced to devote a larger share of them to provide those services, giving up a proper provision of non-essential ones.

18. Further results are also included in Appendix A in the supplemental data online.

Additional information

Funding

This work was supported by the Spanish Ministry of Economy and Innovation [grant number CSO2011-27547].

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