Southern Political Science Association

Politics and Social Spending in Latin America Author(s): Evelyne Huber, Thomas Mustillo and John D. Stephens Source: The Journal of Politics, Vol. 70, No. 2 (Apr., 2008), pp. 420-436 Published by: Cambridge University Press on behalf of the Southern Political Science Association Stable URL: http://www.jstor.org/stable/30218897 . Accessed: 12/11/2013 00:43
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Politics andSocial inLatin America Spending

HuberUniversity ofNorth at ChapelHill Carolina Evelyne Thomas Mustillo Indiana at Indianapolis University John ofNorth Carolina at ChapelHill D.Stephens University
We examine thedeterminants in an unbalanced ofsocialexpenditure pooledtime-series analysis for18 Latin American countries suchanalysis in Latin American fortheperiod1970 to 2000. Thisis thefirst ofspending countries with a fullcomplement state and structure, economic, variables, ofregime, partisanship, demographic ouranalysis to states in advanced industrial countries. matters making comparable analyses ofwelfare Democracy in thelongrunboth social and and health and education stark contrast for security welfare for spending, and--in to OECD countries-partisanship doesnotmatter. authoritarian retrench on Highly repressive regimes spending health and education, butnoton socialsecurity.

and education are an essential health, partof whatgovernments do to enhancethe quality oflifeoftheir and thehumancapital citizens base of their societies.Social scientists have developeda and evidenceto understand strong body of theory socialexpenditures as partand parcelofwelfare state Most of thistheory has been builton development. the basis of studies of welfarestates in OECD countriesand emphasizesmobilizationof social and institugroupsand the role of political parties with economic and tions, factors, along demographic as determinants of welfarestate formation. Our central thistheory travels questionis to whatextent to different contexts and howit needsto be modified forthestudy ofsocialexpenditures in LatinAmerica. Ourfocus on socialexpenditures in Latin America is governed withbuilding on extant by the concern and developing theories ofwelfare theory mid-range statedevelopment acrossregions. In orderto do so, we need to studyregions thatexhibit social policy that can be with thosein regimes usefully compared in OECD countries. Latin America do we find Only as the1970ssocialpolicy as early witha long regimes that covered a of their history majority populations to be concepagainstsocial risksand thus deserve tualizedas welfare states.However,we emphasize thatthereis great in social policyregimes variation withinLatin America, fromUruguayand ranging where a of thepopulation Argentina, largemajority
TheJournal Vol. 70, No. 2, April2008,Pp. 420-436 ofPolitics, @ 2008 Southern Political ScienceAssociation 420

and welfare,remainscovered by social securityschemes and Expenditures on socialsecurity

to El enjoysdecenteducationand healthservices, Salvador andGuatemala, where socialsecurity schemes and quality education and health carereachlessthan 40% ofthepopulation. sincetheOECD welfare state literature Similarly, emphasizes political variables-political parties, politicalinstitutions (federalism, corporatism), policy of stakeholdersin social legacies(the emergence policyschemes)-we need to studya regionwhere thereis variation in thesevariables and they can be studied overa significant of time. For period parties and subnational levels ofgovernment to developand is a prerequisite. In the shape politics, democracy twentieth Latin America was the non-OECD century, region with the most extensiveexperiencewith both fulland restricted At democracy, democracy. thesametime, Latin America a of experiencedvariety nondemocratic from auregimes, highly repressive thoritarianism to populist with authoritarian regimes traits. Thus, LatinAmericaprovidesus withsome to OECD countries, but in contrast to comparability thelatter, Latin America also provides variation great in regime forms. In thisarticle we suggest thefollowing theoretical in theories modifications of welfare statedevelopmentto adapt themto the study of social expendituresin LatinAmerica: First and foremost, we need to incorporate form as an regime independent variable. The countries in themajorstudies included
doi:10.1017/S0022381608080407 ISSN 0022-3816

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POLITICS AND SOCIAL SPENDING IN LATIN AMERICA

421

demstates havehad uninterrupted ofOECD welfare theLatinAmerican ocratic rulesinceWWII,whereas countries haveexperienced periodsof moreand less and full or restricted authoritarianism repressive whether we wantto understand Clearly, democracy. social forms and howthese shape expenditure regime patterns. Second,we need to take into accountthatthe in role of politicalpartiesmayplay out differently and in the different economicand social structures Parties havebeen ofdifferent presence policy legacies. shownto be the keyfactors shapingthe generosity of welfare statesin OECD and redistributive profile Latin Americanpartieswith the same countries. commitments and policypreferences value general as their OECD counterparts, however,may face on effects different constraints, leadingto different Of socialexpenditure importance patterns. particular in the historical of democare differences strength whichin and parties themselves, racy,civilsociety, of in thehistorical formation turn shapeddifferences in and thus the socialsecurity policy legacies systems and clienteles. termsof theirdistributional impact has conof economicpressures Also, the severity on social exinfluence stituted a more important thanin OECD countries. penditures

and Hypotheses Theory

Thereare onlya fewstudies of the determinants of in Latin social expenditures and theircomposition Americathatwe might build on (Avelino, Brown, and Hunter2005; Brownand Hunter 1999, 2004; and Segura-Ubiergo 2001; Wibbels2006). Kaufman use a or all variable Moreover, they dependent lagged firstdifferences for the dependentvariable.This thattheiranalyses of means are analyses essentially in from to next. one the We, changes spending year in contrast, in the determinants are interested of of social expenditures whichare long-term patterns indicated ofexpenditure. Thischoicemakes bylevels our analysis to studies ofsocialspending comparable in OECD countries, the vast majority of whichuse in thelonglevels as well.Similarly, we areinterested runeffects ofpolitical variables. We wouldnotexpect one year of democracy or of dominanceof one or another in thelegislature political tendency and/ or the executive to make a major difference in the formation ofsocialpolicy. We haveshownelsewhere that an extrapolation of short-term effects to the underestimates theimpact ofpolitlong-term greatly ical partydominanceon expenditure in patterns

OECD countries (Huber and Stephens2001, 77). of different levels Whatmatters fortheachievement is the cumulative recordof of social expenditures forces. of different and political democracy strength is theinsight Our theoretical pointof departure thatpoliticalpower statesliterature of the welfare haveprofoundly distributions and institutions shaped of states in OECD thegenerosity and structure welfare setof inthemostfundamental countries. Arguably to the exercise of access and stitutions shaping Access to is form. poweris politicalpower regime under democratic broader and more competitive and the exercise than underauthoritarian regimes, theformer than is accountable under ofpower more we would expectdeunderthe latter. Accordingly, to be morelikely to producepoliciesthat mocracies thanauthorbroadsectors of thepopulation benefit a positive effect we expect itarian Specifically, regimes. and welfare on socialsecurity of democracy expendias wellas on health and education tures, expenditures. on forms The questionof the impactof regime social policy is not confinedto the comparison between democraticand nondemocratic regimes. Not all nondemocratic have the same goals regimes In post-WWII and tactics. and use thesamestrategies from nondemocratic LatinAmerica, regimes ranged and minimally reformist repressive (e.g.,Per6nin his second term, the Peruvian military government and highly underVelasco) to reactionary repressive of regimes regimes(the bureaucratic-authoritarian and the Southern cone, e.g., Chile underPinochet, in Central the military regimesand dictatorships tolerated and America).While the former regimes and at timesencouraged popularorganization prosocial spending tectedor even increased levels,the and latter used repression to weakenpopularforces theexisting their to challenge socioeconomic capacity orderand make claimson the state.Theylet real and reduced theresources devoted wagesdeteriorate we would to satisfying popularclaims.Accordingly, a effect of authoritarexpect negative highly repressive ian regimes on social expenditures. When repressive authoritarian regimesare replacedby democratic the latter facespending levelsdepressed far regimes, we belowwhatis acceptable to thevoters. Therefore, a legacy that will ofrepressive authoritarianism expect fadeovertime. forthe emeris also a precondition Democracy and pressure genceof strong parties groupscapable democratic ofshaping publicpolicy. Onlyprolonged as makes it for to consolidate rule parties possible to civilsociand establish connections organizations trueforparties ety.This is particularly representing

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422

EVELYNE HUBER, THOMAS MUSTILLO, AND JOHN D. STEPHENS

theinterests oftheunderprivileged; thatis,parties of theleft. Authoritarian create to regimes may parties fortheregime, butin LatinAmerica provide support most authoritarian the regimes actively suppressed left. also allows for the of Democracy strengtheninga of in civil lower thatrepresent variety groups society classinterests and mayattempt to influence policy. FromtheOECD welfare literature state we know thatthestrength ofparty worldblocswithdifferent and constituencies is views, value commitments, crucial fortheamountand structure ofsocialexpenditures. of left-wing Long-term parties incumbency results in generous, and redistribinclusive, highly utive welfare with extensive of states, publicprovision free or subsidized social services. incumLong-term and center in partiesresults bencyof secularright welfarestates,with heavy residual,nongenerous on meanstesting reliance and scanty and financing of social services. provision incumbency Long-term of Christian in generous democratic results parties welfare but with a less and redistribinclusive states, and with heavy relianceon private utive profile, of financed or mandated services provision publicly al. et Hicks and Mishra Castles 2003; 1982; (Bradley 1993;Huber,Ragin,and Stephens 1993;Huberand Swank 2001; 1992). Stephens The strong effects oflong-term party incumbency the pursuit stemfrom of policiesmotivated by different commitments to fundamental valuesand core constituencies. Both expertsand politiciansplace on a left-right defined continuum parties primarily of their views the socioeconomic order (Alcantara by and Freidenberg 2001; Castles and Mair 1984; Parties Coppedge 1997). competeon otherissues, of course,such as urbanversusrural, and ethnicity or but authoritarianism versus democracy, religion, these other cleavage structures vary considerably theleft-right division is presacross countries whereas inWestEuropean enteverywhere 1981)and (Lijphart Latin American(Alcantaraand Rivas 2006) party systems. Parties oftheleft are committed to thevaluesof and or in termsto equality solidarity, operational in to reduceinequality usingthestate byintervening the economyand providing redistributive transfers and socialservices. Parties of theright come in two varieties-traditional and liberal. Both kinds are to the value of hierarchy, but the tradicommitted tionalconservatives and theuse of accept paternalism thestateto preserve the economicand socialorder, whereas theliberals and freeespouseindividualism dom fromstate interference in the economy.In both kindsof conservatives use terms, operational

the stateto protecteconomicwinners by keeping direct taxation low and providing fewtransfers and social services, or givingthema nonredistributive Christian democratic are committed profile. parties to an organic where the has a worldview, community to providefor all of its members, responsibility on the subsidiarity whichholds working principle thatthestateonlystepsin where thefamily and the are unable to community provide(van Kersbergen in theircommit1995). However, vary they greatly ments to equality,particularly in Latin America and Scully 2003). (Mainwaring Of course, haveother valuecommitments parties that are relevant for social policy,particularly for health and education suchas progress, develpolicy, and nationalism, but the commitments to opment, and are shared across the progress development party to a greater extent thancommitments to spectrum and solidarity. to theextent that Therefore, equality theseothercommitments influence social expendiwe would expectthemto workin the turepolicies, of increasing same direction on health expenditures and education and thusto reduceinterparty differences.The mostrelevant difference between parties with respect to social policy,and in particular its is location on the distributive their profile, left-right continuum. A briefjustification of our focus on political in is order, parties giventhat some scholarshave that in argued parties LatinAmericaare comparacohesionand weak,have littleprogrammatic tively shallow roots in and civil relate to their only society, base largelythroughclientelism (e.g., Ameringer and Torcal 2006). 1992; Ames 1995; Mainwaring social scienceis cumulative and we want to First, have on the understand the kindsof effects parties structural and samekindsofpoliciesunderdifferent conditions. historical Second, other scholarshave that at leastbytheendofthetwentieth demonstrated in some LatinAmerican someparties councentury mattered. triesclearly Luna and Zechmeister (2005) have shownon the basis of eliteand mass survey variationacross evidencethat thereis meaningful in theirsample of the extentto which countries and represent the partiescohereprogrammatically Colomer and voters'policypreferences. Moreover, on thebasisofdatafrom Escatel(2004) demonstrate Latinobarometer from1995 to 2002, for17 surveys Latin American thatan averageof 78% countries, on a left-right ofcitizens are ableto placethemselves scale. Finally, scholars havedemonstrated theimpact of partisan on formation in Latin preferences policy America. Gibson traces the connection between (1997)

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POLITICS

AND SOCIAL

SPENDING

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in the shaping of categories of civilservants and all of themwere coalitions policyand electoral and Murillo the overall market reforms, (2001) discusses regressive. Inthis the ofparties ofthe and partisan coalitions left behavior oflaborunions in context, preferences for of the social suchreforms. were gradual expansion security system, Theability ofparties with different on first to bluecollar workers andthen to those in the positions in with informal with unification and the scale to accordance sector, improveshape policy along left-right inthegeneral in ment ofthe benefits Parties of their andenduring value commitments system.' underlying to protect and the hasto be understood thepost-WWII within theright preferred fragmentation period benefits in the thecontext ofeconomic the but social systems, reducing development strategies, privileged was not a before structure ofthe labor andpolicy The security the market, expenditures priority legacies. crisis ofthe1980s andtheopening oftheLatin roots oftheLatin American socialsecurity systems debt economies. As longas ISI was pursued, arein theBismarckian basedmodel, American occupationally later disseminated the International Labor social schemes for sector workers were private security through contribuOffice schemes were first financed andemployer (ILO). Social security byemployee mainly in established forprivileged tions. several countries contribuIndeed, police, groups(military, employer civil and later extended to crucial tions reached rather to judiciary, servants) high levels,comparable levels. whitecollar(teachers, bankemployees) and blue European The reason this waspolitically why collar railroad catefeasible was that tariff workers, (miners, workers) port employers, protected byhigh and to formal in to sector were able these costs on to the consumers. walls, pass gories, finally employees In thepioneer this Thedebt crisis of1982 andthe neoliberal countries, general. process began ensuing in the1920s andaccelerated in the1940s and 1950s, structural the policies adjustment changed situation linked to import substitution industrialization As barriers werelowered or (ISI). radically. protectionist A second ofcountries followed suitsometwo removed, fora lowering oftheir group employers pressed decades and in theleastdeveloped countries contributions to socialsecurity schemes. As unemlater, ofsocialsecurity schemes remained andinformalization concoverage highly ployment spread, employee limited tributions and coverage and the social 1978, 1989, declined, 3-6). (Mesa-Lago The mainpolitical constellations under which security faced fiscal the crises, systems aggravating socialsecurity schemes were fiscal crises faced Latin American states. expanded priv- general beyond by consisted ofdemocratic under Thus, reduction ofsocial ingeneral and ileged groups regimes expenditures with autonomous labor movements social in became a left-leaning parties security expenditures particular of the Colorados in PLN in Costa for the The Chilean model of (factions Uruguay; priority right. pension with closetiesto organized labor, privatization-heavily Rica),or regimes promoted by the World democratic Front andtheUnidad thereform ofchoice forneoliberals (thePopular Pop- Bank-became ularin Chile), semidemocratic in on the It is to in (Per6n Argentina), right. importantkeep mind, though, or authoritarian in in PRI that the transition costs ofsuch reforms were andstill Mexico). (Vargas Brazil, The degree of fragmentation and inequality of the aresubstantial. evenradical in Accordingly, changes socialsecurity schemes but all systems had thesocialsecurity did not translate into a varied, systems schemes for the and various radical of in the short run. privileged military lowering expenditures The leftrejected and preferred privatization reforms aimed at theconstruction ofunified public
to point out thatsocial security have 1Itis important systems been regressive forthreereasons.First, theretypically were/are different fordifferent of employees (blue programs categories and sectors(e.g., military, collar,whitecollar,civil servants) bank employees)with different professors, judges, university levelsof generosity of benefits, withthe more generousones taxes.Second,within each scheme beingsubsidized by general benefits tendto be earnings-related. socialsecurity coverThird, themostparthas beentiedto formal sector age for employment. Sincethemainconstituencies ofleft havebeenbluecollar parties workers and the poor, or people in the informal sector,left have promoted reforms to unify and parties programs equalize and to include people in the informal sector by benefits, social transfers and health care expandingnoncontributory Good examples of thisare the leftof center programs. parties in Chile(going backto theUnidadPopular), and Costa Uruguay, Rica.

withstrong basic benefits. as the Moreover, systems loss of formal sectoremployment leftan increasing of thepopulation without socialsecurity proportion and as levels rose, coverage poverty expansionof socialbenefits assumed noncontributory growing priforthe left.However, leftand right were exority constrained in finding resources forsocial tremely differences between left Thus,theactualpolicy policy. and right concerned the allocation of social security moreso thantheir and we expenditures magnitude, forthe impactof adopt a nondirectional hypothesis on the partisan politicalstrength in the legislature overall amount ofsocialsecurity andwelfare spending.

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424

EVELYNE

HUBER,

THOMAS

MUSTILLO,

AND JOHN D. STEPHENS

in Latin of social security The reality spending America at thebeginning of thetwenty-first century The bulkofsocialsecurity is thatit is stillregressive. to a and the remainder goes to pensions, spending allowances few kindsoftransfers suchas family other is grouped benefits. Social assistance and maternity in our data, and welfare withsocialsecurity spending forlessthan20% of thetotalin this but it accounts of countries only.2In the greatmajority category to formal confined remains social security coverage whichmeans thatoften20% to sectoremployees, remained active 60% oftheeconomically population in De Ferranti etal. (2004,268-72), a study excluded. and a rangeof studies fortheWorldBank,reviewed the in LatinAmerica foundthatin most countries of social spending security components regressive Skoufias, Lindert, components. outweigh progressive on the thisassessment and Shapiro(2005) confirm microdata. ECLAC of basis of theiranalysis (2002, shows that social security 28) similarly spending benefits to middleand upperstrata. greater provides Thereare a numberof cash transfer programs but are not thatare groupedundersocial security and areproand earnings-related employment-based and some as such pensions noncontributory gressive, are highly cash transfers. conditional Theygenerally effects beneficial have additional and progressive are school atforreceipt as the conditions insofar healthcarevisitsof children. and primary tendance reviewed cash transfer The conditional by programs are and Coady (2003), however, limitedin Morley of0.2% a maximum and financing, reaching coverage socialassismeans-tested of GDP. Noncontributory, scarceand poorly tancepensionsare stillrelatively as well (Muller2005). In thepast fewyears, funded in Brazil, undertheleft-wing Uruguay, governments and Chile, these programshave been expanded means effective a highly Theyareclearly considerably. but incomeand reduce to redistribute poverty, in the by our data theystillaccountfora periodcovered ofsocialsecurity and welfare smallpercentage spendvariation there is considerable Nevertheless, ingonly. exand welfare in the allocationof social security we have indeed betweencountries, and penditures balanceof elsewhere thata left-leaning demonstrated with lower in the is associated legislature power Caribbean in Latin American and incomeinequality for countries (Huberetal. 2006). Ifwe had a measure and distributive theoverall impactof social security

a poswe would hypothesize welfare expenditures, but for of a left-leaning itiveeffect balance, partisan we adopt a nonthe overalllevel of expenditures directional hypothesis. in Latin caresystems The development of health ofsocialsecurity is linked to thedevelopment America In manycases, healthcare insurance has schemes. the of in sense that social part security paralleled contributions and social security employer employee In somecases, carehas insurance. havegoneto health clinics and hospitals, beenprovided bysocialsecurity under and hospitals clinics in othercasesby private in still and withthe social security contract system, Publichealth others by publicclinicsand hospitals. subsidized social have sometimes security expenditures healthcare and alwayssupported publicclinicsand and in healthcampaigns, hospitalsand preventive have socialsecurity some countries provided systems in basis.In general, health careon a noncontributory constituenciesoftheir theinterests linewith primary and thepoorin thecaseofleft-ofbluecollar workers and middleand upper-income center groups parties, have in thecase ofright-of-center parties-left parties an improvement of the public healthcare favored and right have favored proviprivate parties system Howor social security sion and private financing. was where formal sector ever, employment highand of healthcare had been social security financing leftof theworkforce, forsome sectors established of of-center expansion employpartiessupported insurancelinked to privatenonprofit ment-based universal ofcareto reach virtually coverage provision and Uruguay). (as in Argentina showsa in LatinAmerica The educational system and publicprovision. of private combination similar school and secondary At the primary level,private in Catholic schools-hasbeenthe attendance-heavily forthe middleand thanthe exception normrather At the classes. level,publicuniveruniversity upper role. Catholicuniversities sitiesplayeda prominent of other but the proliferation have a long tradition, recentphenomenon. is a fairly privateuniversities in publiceducation havebeen a conImprovements theright has whereas of the sistent left, point program and public choicebetween private supported parents' on income. schools-a choiceheavily contingent of healthand Thereare regressive components the progresbut in general educationexpenditures, ones theregressive tendto outweigh sivecomponents of different et al. 2004,263-64). Studies (de Ferranti educaon tertiary showthatexpenditures programs ofexpenditures the two IMFsources 2The separately report types whereasbasic educationand social in these 179country for observations, security tion are regressive, only; years for 83%ofthespending. accounts forthe healthservices provided by thepublicsector

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POLITICS AND SOCIAL SPENDING IN LATIN AMERICA

425

and school nutritional have a uninsured programs incidence Scott 2003 for Mexico; progressive (e.g., in the Wodon 2003). ECLAC dataforeight countries show that the most types of region progressive on primary and secondary arespending expenditures on healthcare educationand thatpublic spending and nutrition is thesecondmostprogressive category and Shapiro (2005) Skoufias, (2002, 26). Lindert, concludethatthebulkof education has a spending and health has profile generally progressive spending a slightly or neutralprofile. Thus, on progressive of left-leaning balance,we expecta positiveeffect dominance in thelegislature on health and education expenditures. in OECD Federalism has been held responsible countries for slowingthe expansionof the public sectorin general and the welfare statein particular and Castles2005; Leibfried, (Castles1999; Obinger, Schmidt1997). Federalism and otherinstitutional thatprovideveto pointsprovidethe arrangements for of legislation to mobilize opportunity opponents to block its and thus make the attempts passage adoption-but also the curtailment-of important social policy schemesmore difficult (Bonoli and Mach 2000;Hicks1999;Huber,Ragin, and Stephens 1993;Huberand Stephens 2001;Maioni 1998;Swank 2002). In general, federalism is likely to havea stronger on under democratic impact expenditure patterns are followed. It rule,whenconstitutional provisions has the strongest to serve as a brake on potential or retrenchment of social spending ifthe expansion of subnational unitshave a shareof representatives formal and realdecision-making it power.However, is theoretically that subnational possible powerholdersunderauthoritarian regimes mayhavebargaining withthe central and use that leverage government to extract more resources from the center for leverage socialexpenditures. Thiswouldbe particularly likely to occurunder authoropen,nonrepressive relatively
itarian regimes,or authoritarianregimesthat allow for some kinds of elections. Accordingly, we investigate the impact of federalismregardlessof regime type,as well as the impact of federalismunder democracy only. Since our period of analysis,1970 to 2000, includes both phases when expansion and retrenchment were on the agenda (though more of the the could counlatter), positive and negativeeffects terbalanceeach otherand statistically this may result

needs.We expect a positive effect of GDP percapita, and theproportion of theelderly urbanization, population on socialsecurity in Latin American spending countries. We also expect a positive ofGDP per effect and size of the schoolage popcapita,urbanization, ulationon health and education Giventhe spending. nature of in we studies, contradictory findings previous for theeffect oftrade adopta nondirectional hypothesis on both of We openness types spending. expecta effect of FDI on social and negative security spending a positive oneonhealth andeducation because spending of the importance of humancapitalforemployers to be competitive intheworld Fiscal needing economy. deficits sooner orlater callfor andwe policies, austerity would expect themto havenegative effects on both social security/welfare and health/education expenditures. We wouldalsoexpect ofan IMF agreepresence mentto be associated withlower levels ofbothsocial and health/education security/welfare expenditures. If one considers of macroeconomic trajectories and fiscal in LatinAmerica overthelast management three decadesofthetwentieth it century, is clearthat wentthrough three distinct they clearly phases.The 1970swerea periodofslowedgrowth but continued based on easy borrowing on expansionof budgets international markets. The 1980sweretheperiodof thedebtcrisis, economic auscontraction, budgetary and reverse flows from Latin America terity, capital to the creditor In the early 1990s the countries. constraints eased as capitalbeganto flow budgetary back to Latin Americaand economic growth resumed. Starting in the mid-1990sa number of financial crises had regional and slowed effects ripple These trends affected all the countries growth again. in theregion, with somewhat different though timing and to different if we take the Therefore, degrees. 1970s as a baseline,we would expect a negative for 1982-89 (the first and last years period effect for which theaverage in rates the were growth region on levelsof social spending. The expectnegative)
ations for the 1990s are more ambiguous; the 1990s were clearlyan expansionaryphase, but therewas a lot of ground to make up and it is not clear whether most countriessurpassed the levels of social expendituresof the 1970s.

in no significant effects.

Our controlvariablesinclude economic and demboth the needs for social ographic factorsthat affect and governmental expenditures capacityto meetthose

Measures oftheDependent and Variables Independent

Our measures of social spending as a percentageof GDP are derived fromseveralsources (see Table 1).

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426 TABLE 1

EVELYNE HUBER, THOMAS MUSTILLO, AND JOHN D. STEPHENS

VariableDescriptions, Data Sourcesand Hypothesized Effects forSocial Spending Levelsin Latin America Hypothesized impact: Variable Description Socialsecurity andwelfare as a percent ofGDP.a spending Health andeducation as a percent ofGDP.a spending SocialSecurity Health & & welfare education

Variables Dependent Socialsecurity & welfare spending Health & education spending Variables Independent controls Methodological Datasource indicator
Debt crisis Recovery Logicofindustrialism GDP per capita

Coded1 ifCominetti for health and is thesource (1996)

coded 0.a data,otherwise spending 1982-1989 1990-2000

+/+/+ + +

+/+/+ + + +/+

Urbanpopulation Agedpopulation Youthpopulation Globalization Tradeopenness Total exports and imports as a percent of GDP.b direct investment Net inflows offoreign direct investment as a percent ofGDP.' Foreign inflows Deficit Government deficit as a percentage of GDP.c

PercapitaGDP in thousands of 1995purchasing powerparity dollars.b in areasdefined as urban.' % of population living % ofpopulation age 65 and older.' % of population age 14 and younger.'

+/-

IMF

Political factors Democracy

Scored eachyear a country hasrepurchase 1 for obligations with theIMFand0 for eachyear itdoesnot, cumulative since1970.' + +/+/+/+/+ +/+/+ +

Cumulative ofdemocracy from 1945 to theyear ofthe years observation., Federalism andVenezuela codedas federal.a Brazil, Mexico, Argentina, Democratic federalism Dichotomous indicators offederal democracies. ofrepressive in theprevious authoritarianism Years authoritarianism 5 years., Repressive Balance index of in Partisan Cumulative center of the Legislative ideological gravity lower housefrom 1945 to theyear oftheobservation (seetext).a ofideological ofgravity in the Executive Partisan Balance Cumulative index center executive from oftheobservation 1945to theyear (seetext).a
aHuber etal. 2008; bPenn World Table Version Bank Sources: 6.1;CWorld (2003)

and welfare is fromthe The measureof social security IMF. The measure of health and education spending combines data from ECLAC, Cominetti (1996), ECLAC's Social Panorama, and the IMF. The constructionof the health and education series and the methodologyfor dealing with the varied sources are explained in the appendix available at our web site Our de(http://www.unc.edu/-jdsteph/index.html). tailed analysisof the sources showed that the Cominetti health and education series was significantly

higherthan the others,so a dummyvariableforthat data source is included in the analysisof health and education spending. Our measure of democracy is based upon the classification of regime types in Rueschemeyer, Huber Stephens,and Stephens (1992), updated accordingto those coding rules. Colonies and all kinds of authoritarianregimes are coded as 0, restricted democracies as .5, and full democracies as 1. The measure cumulates the annual series since 1945, to

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POLITICS

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all contain in the saythat these residual record thestrength of thedemocratic parties categories capture to or that are not classifiable according left-right post-WWII period.3 a Christian-secular criteria. authoritarian as We coded repressive regime In tworespects, his we rather adopted directly yearwherethe separate category, using 1 forevery his classification scheme.6 and 0 work. we adopted had a repressive authoritarian First, country regime in we his all but one without such a authoritarian forevery case, Second, adopted classiyear regime; thatfall fication of for the if committed were coded as parties country-years repressive they regimes oursample. Wemake onerevision: or toleratedwidespreadhuman rightsviolations. within Coppedge while five classified the Peronists of as cumulated over the scores were "other," Argentina years Yearly the we them as secular center-left We reason that the to the of observation. classify during prior year 1945 and 1973; as effects of authoritarian rule would fade through democratic episodesbetween the democratic secularcenter time.4(See AppendixTable 1 at http://www.unc. during yearsfrom from 1990 to and as secular 1974 for 1989; classifications.) center-right regime edu/-jdsteph/index.html variables arederived from Our political Coppedge onward.7 We use hisclassification scheme to expand the In his he consulted (1997). experts project, country to the full of countries and that elections to classify which contested years parties coverage range political After eachparty, within ouranalysis.8 for the lower house or constituent assembliesin fall classifying theproportion oftheseats held of LatinAmericafromas farback as we summed 11 countries byeach in 13 This for each results His classification scheme contains two primary category country-year.9 1912.5 it annual series secular secular dimensions and severalresidualcategories. left, center-left, First, (secular in defined secular secular Christian includes a left-right dimension, center, primarily center-right, right, witha Christian Christian social and economicterms. He is concerned Christian left, center-left, center, Unand class appealsand with center-right, Christian Personalist, Other, right, political party's ideology of and redistribufor each Each series indicates the its relative known) prioritization growth country. inthelower tion.This dimension is dividedinto fivecategories: seat share house orconstituent assembly left and right. Sec- held secular center-left left, center-left, center, parties, parties, center-right, bysecular dimension of two cate- etc. Duringyearswhichare nondemocratic, as ond, it includesa religious and secular. It those defined our all Christian variable, categories by gories, distinguishes democracy whichdo and do not base theirideology or are scored as 0. In our analyses notonlyof social parties in the or but also of Catholic the and Church, Bible, (Huber programs spending inequality poverty or seek to defend the interests et al. and 2006; Huber, Pribble, 2006),we philosophy Stephens religious of theCatholic Church and to reducetheseparation found that thereligious dimension wasnotrelated to of church and state. his classification scheme anyofthedependent variables. we combined Thus, Finally, contains three residual andsecular Cusack other, the personalist, categories: religious categories. Following and unknown. For our purposes, it is sufficient to and Fuchs (2002), we thencalculated legislative
measures etal.,Freedom 3Wealso examined developed byAlvarez etal.Notsurprisingly allofthese arehighly House,andMainwaring our cumulative versions of themeasures. correlated, particularly Alvarez et al. (1996) endsin 1990and Freedom House begins in do not have sufficient forour 1972,so thesemeasures coverage et al. and Rueschemeyer, Huber purposes.The Mainwaring and Stephens annual measures are highly correlated Stephens, versions ofthemeasures arevery (.85) and thecumulative highly correlated that substituting (.95). Thus, it is not surprising forRueschemeyer thesameresults. Mainwaring yielded variables we developed, and experimented 4Forthethree political over fourperiods:1945 to yearof with,measurescumulated and the 15, 10, and 5 yearspreceding the yearof observation, observation. We selected the measure used in the finalanalyses for theoretical reasons (democratic history expectedto have term as wellas empirical ones (better effect) longer performance in regression models). a general defense ofthevalidity ofexpert in assessing 5For surveys party positions, see Steenbergen,Hooghe, and Marks (forthcoming).

balance (or simply partisan legislative partiofpower the in seat share a san balance) byweighting given - 0.5 ofeachcategory ofparties year by- 1 for right, for 0 for 0.5for and1 center, center-left, center-right, for left Forexample inCosta Ricain1971, the parties.

6See Coppedge(1997) fordetailedcategory availdescriptions; able at http://www.nd.edu/-mcoppedg/crd/criteria.htm. did not changethe 7UsingCoppedge'scodingof the Peronists results of theanalysis. 8Unlike Instead, Coppedge(1997),we did notuse expert surveys. two members of our team independently consulted numerous and reference in orderto code each political materials primary on for which there was a disagreement, we Then, party. parties did seek external the entire research expertinput,and finally teamconvened to makea decision. of tallying seat sharesdiffers fromCoppedge 9Our procedure (1997), who talliedvote shares.We make this choice on the thatseatsharesare moreconsequential forpolicythan grounds voteshares.

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428

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AND JOHN D. STEPHENS

seatswas .386, of legislative center-right proportion the centerleft .579 and the left was .035. The balancewas (.386*-.5)+(.579*.5) partisan legislative = theweighted we cumulated +(.035*1) .132.Finally, value withineach seriesfrom1945 to the year of We createda cumulatedmeasureof observation. balancein thesameway,based on executive partisan whichparty controlled thepresidency. with a dichotomous We measure federalism and Venezuela variable.Brazil,Mexico, Argentina, as federal, ofthecountries wereclassified and therest as not federal. federwereclassified To testwhether alism only affected spending during periods of termin which we created an interaction democracy, in federal countries werecodedas 1 in years thefour democracies and all were restricted or full which they werecoded as 0. other observations of globalFivevariables our measures comprise as exports and ization.Trade opennessis measured as a percentage of grossdomestic product. imports direct net inflows of investment measures Foreign as a percentage of grossdomestic investment proddeficit uct. We measurea central by government's total total as from revenues, subtracting expenditures we a percentage of grossdomestic product. Finally, or nota country to measure whether use a dichotomy to theIMF in a given has repurchase year. obligations variableforIMF influTo deriveour independent from1970. ence,we thencumulatethe dichotomy and Pettinato's We also included Machado, Morley, butitis index of account liberalization, (1999) capital for362 of our 510 country years. onlyavailable and demthree additional economic We employ real controls. we use First, grossdomestic ographic for purchasing power productper capita,adjusted of the Second,we includethe percentage parities. populationwhich is 65 and older for the model and social security and welfare spending, predicting which is under of the population the percentage 15 yearsof age forthe model predicting spending
on health and education. Finally, we include an urbanizationvariable,which measuresthe percentage of the population thatlives in areas definedas urban.

2 TABLE

Mean Social Spending as a Percentage of GDP SocialSecurityHealth and and Welfare Education N

Argentina Bolivia Brazil Chile Colombia Costa Rica DominicanRepublic Ecuador El Salvador Guatemala Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela All country years 90thpercentila

10th percentile

5.5 2.9 7.4 8.7 1.8 3.7 0.9 0.2 0.5 0.6 0.7 2.9 3.0 4.5 2.2 0.9 13.7 1.8 3.6

0.4
8.5

5.4 6.0 4.5 5.9 5.6 9.5 3.5 4.6 3.7 2.6 6.0 5.5 5.8 10.0 2.5 3.8 5.0 5.4 5.2

2.4
9.3

30 21 27 29 11 29 28 18 31 27 24 27 15 21 27 23 28 30 446

Analytic Techniques
We use an unbalanced panel data set with 446 obfrom18 Latin Americancountries.Table 2 servations lists the countries and the means of the dependent variables and the number of observationsfor each country. The data span the period 1970 to 2000.

are annual. With fewexceptions, the observations Hicks notes that "errorsfor regression equations frompooled data using OLS [ordinary estimated tend to be (1) least squaresregression] procedures het(2) cross-sectionally temporally autoregressive, correlated as and (3) cross-sectionally eroskedastic, and (5) well as (4) concealunit and periodeffects acrossspace,time, some causalheterogeneity reflect BeckandKatz's(1995) orboth"(1994,172).We follow standrecommended using panel-corrected procedure, corrections for first-order arderrors, auto-regression, and impositionof a common rho for all crossThis procedure is implemented sections. in version Since there is 8.0 oftheStataeconometrics program. do not include a in our we some trend data, lagged Beck and variable as recommended by dependent Katz (1996) because in this situationthe lagged the suppresses dependentvariableinappropriately variables,as Achen power of other independent and Katz (2004, 16-17) has Beck shown.1' (2000) for first orderautorehave shownthat correcting does includea laggeddependent gressionactually on theright handsideoftheequation. variable Thus, ofserial correlation but theproblem itdoes dealwith
'01nthese variable 98% ofthe data,thelagged dependent explains in thedependent variation variable.

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POLITICS AND SOCIAL SPENDING IN LATIN AMERICA

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as our results the power The latter be violatedif unmeaswithout, show,suppressing assumption might ured variable in all units factors affect the of other variables. dependent independent haveargued for at thesamepointin time.Globaleconomic Beckand Katz (1996) and others fluctuasuchas thedebtcrisis the inclusion of country dummiesin orderto deal tions, periodin LatinAmerica, effects. and could produce such contemporaneous To withomitted variablebias. Plimper,Troeger, of evaluatethe potential Manow (2005, 330-34) in theirrecent treatment of such unmeasured impact the models thisissue have countered of country period specific factors we re-estimated thatinclusion omitted withindicator dummiesdoes much more than eliminate variables forthedebtcrisis(1982-89) in for variation and the 1990s variable bias. It also (1) eliminates (1990-2000);thebaseline category any thedependent which is due to timeinvariant corresponds to 1970-81. The robust clusterOLS variable in constitutional weresubstantially the same as the Prais factors suchas difference structures, estimations factors that Winsten We note below instances reduces the coefficients of estimations. in (2) greatly vary differwhich eliminates the robust cluster estimations indicate that our between countries, (3) mainly any encesin thedependent due to differences at significant variable results are not robust. and (4) "completely Since the models in Tables 3 and 4 are GLS tl in the timeseries, absorb(s) in the levelof the independent variables regressions, R2.The measure differences there is no conventional across the units" (331, emphasisin the original). calculated to measure bytheStataprogram goodness if of fits on that one is a GLS R2." Given the this last of "pseudo Elaborating point,they argue sensitivity varithis in that the level of the statistic to the made order to hypothesizes independent assumptions able has an effect on the level of the dependent calculate someanalysts consider theOLS R2to them, variables(e.g., history of democracy and level of be a better indicator of goodnessof fit.We report is bothR2s. social expenditures), "a fixedeffects specification not the model at hand. If a theory level predicts one should not include unit dummies.In effects, thesecases,allowing fora mildbias resulting from Results omitted thanrunning a fixed variables is lessharmful effects (#1 (334). We do hypothesize specification" The resultsof regressions of social security and effects of time invariant factors above) (federalism), welfare on the are variables independent spending in thelevelsofour independent variables (#3)effects in Table 3. Model includes the control 1 at displayed variable priorto tl on thelevelof thedependent Model2 addsthepolitical variables. variables. Model3 of levels of the independent tl, and (#4) effects substitutes executive balance for partisan legislative variableson levels of the dependentvariable.In balance. Democracyis the only political partisan addition,variationin severalof our independent variablethat is significant and correctly signed.A variables is primarily crosssectional (#2).Thus,it is move from the 10thpercentile to the 90thpercentile clearthatfixed effects estimation or theinclusion of on democracy in an (a move of 29.5 years)results in thiscase. dummies is not appropriate country in increase socialsecurity of 1.8% of GDP. spending To checkour results forrobustness, we reestiWhile not verylarge,this effect is not negligible, matedall of themodelswithOLS estimation of the a mean of of GDP. 3.6% Repressive whichprovides consistent es- given sample coefficients, regression authoritarianism falls short of significance. Both timates oftheregression and robust-cluster coefficients, and legislative balancearenegative partisan estimators of the standard errors.The robust-cluster executive
variance estimatoris a variant of the Huber-White robust estimator that remains valid (i.e., provides correctcoverage) in the presence of any patternof indicatingthat right-of-center legislaturesand governmentsactuallytend to spend more (or cut less) but both coefficients are insignificant."Federalism and the democracy-federalism interactionterm are correlations among errorswithinunits,including not significant. The one control variable which is serialcorrelation and correlation due to unit-specific consistentlysignificant, aged population, is a very components (Rogers1993). Thus the robust-cluster powerful determinantof the level of spending on

standarderrorsare unaffected by the presenceof unmeasured stable country-specific factors causing correlation errors of observations for the same among
or forthatmatterany otherformof withincountry, unit error correlation.The robust-cluster estimator requires errorsto be uncorrelatedbetweenclusters.

themodels with different timeperiods for thepolitical "Running variablesdoes not changethe results. All periodsforpartisan balanceand repressive authoritarianism remain the insignificant; resultsfor democracyfor 15 previous years are somewhat but for5 and 10 years are insignificant. stronger

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430 TABLE

EVELYNE HUBER, THOMAS MUSTILLO, AND JOHN D. STEPHENS

3 Prais-Winsten Estimates of Determinants of Social Security and Welfare Spending Model1

.266 (.227) .370 (.332) -.102 (.164) .050* (.023) 1.283* (.298) -.008 (.006) .002 (.021) -.007 (.016) -.025 (.036)

Variables
Debt crisis (1982-89) Recovery(1990-2000) GDP per capita Urban population Aged population Trade openness FDI Deficit IMF Democracy Federalism Democratic federalism Repressiveauthoritarianism Legislativepartisanbalance Executivepartisanbalance Common p Constant OLS R2 Prais Winsten R2

Model2
.172 (.228) .205 (.337) -.171 (.167) .033 (.030) 1.196* (.238) -.007 (.006) -.001 (.218) -.011 (.016) -.012 (.036) .061" (.031) .746 (.951) .072 (.370) .124 (.139) -.090 (.052)

Model3
.209 (.228) .278 (.334) -.162 (.170) .032 (.032) 1.205* (.255) -.008 (.006) .000 (.021) -.010 (.016) -.017 (0.38) .054* (.032) .775 (1.017) .077 (.373) .104 (.145) -.026 (.037) .89 -3.641* (1.593) .72* .29*

.91 -4.354* (1.269) .68* .24*

.88 -3.835* (1.507) .73* .31*

*p < 05; two-tailed testopenness, democratic and partisanship; otherwise one-tailed test. federalism, federalism, recovery, N = 446

social security and welfare. A move fromthe 10th to the on thepercentage of 90thpercentile percentile in an the aged population(a moveof 5.5%) results and welfare of increasein social security spending ofthesample meanof3.6% of 6.5% ofGDP. In light thezeroorder GDP, thisis a very Indeed, largeeffect. between the social security and welfare correlation and of the spending populationis aged percentage .79. ofregressions and education The results ofhealth on the variables are displayed spending independent in Table4. The modelscontain thesameindependent as in Table3 except is variables that population youth for aged population.Democracyand substituted authoritarianism are correctly repressive signedand A move from the to the 10th percentile significant. on repressive authoritarianism 90th percentile (five in in and results a decrease health education years) of 1.3% of GDP; a similar spending changein dein an increase in spending of2.7% of results mocracy ofa samplemeanof5.6% ofGDP, this GDP. In light
for thepolitical themodels with different timeperiods 12Running authoritarivariables does not changethe results forrepressive but somewhat weaker forthe anism,whichremains significant and partisan remains which balance, periods, longer insignificant. falls short ofsignificance for the10-and 5however, Democracy, for the 15-yearperiod. This year periods,but is significant consistent our theoretical contention thatit is pattern supports democratic rulethatmatters forpolicy. long-term

is a substantively Federalism and the largeeffect.12 federalism interaction term are not democracy significant. Both legislative and executive partisanship are incorrectly signedand the latteris significant. in the robustcluster it is not However, significant thatthefinding is not robust. estimates, indicating GDP per capita is consistently and significant is A but its effect modest: move from correctly signed, the 10thpercentile to the90th percentile is associated in health withan increase and education of spending deficit is also 1.4% of GDP. Government budget and correctly signed.A move fromthe significant on thisvariableresults in a 10th to 90th percentile decreaseof 0.3% of GDP in healthand education a surprisingly smalleffect.13 spending, In contrast forsocial security to the results and the debtcrisisindicator is signifiwelfare spending, Allcountries cantand negative. experienced pressures across the board in this to reduce expenditures and welfare social security expenperiod.However, and education weremoreresilient thanhealth ditures expenditures.

withtheMorley, Machado,and Pettinato (1999) 13Regressions indexforbothdependent variables capitalaccountliberalization causedus to lose 148cases,and theindexwas notsignificant, so we are not including themodelsin thetables.

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POLITICS AND SOCIAL SPENDING IN LATIN AMERICA

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TABLE 4

of Healthand EducationSpending of Determinants Prais-Winsten Estimates Variables Model1 -.406* (.217) -.225 (.316) .994*(.312) .231"(.109) -.002 (.023) .032(.066) .002(.006) -.250 (.028) -.041* (.015) .147^(.035) Model2 -.439* (.207) -.460 (.298) 1.076* (.333) .236*(.100) -.019 (.023) .101(.067) .006(.006) -.024 (.031) -.039* (.015) .121^(.030) .090*(.026) .149(.683) .549(.356) -.259* (.077) -.091 (.060) Model3 -.462* (.206) -.497 (.294) 1.055* (.329) .200*(.099) -.010 (.023) .122*(.068) .003(.006) -.024 (.030) -.040* (.015) .135^(0.32) .085*(.025) .287(.697) .593(.356) -.226* (.080)
-.106^ (.042)

Debtcrisis (1982-89) (1990-2000) Recovery Datasource indicator GDP percapita Urban population Youth population Trade openness FDI Deficit IMF Democracy Federalism Democratic federalism authoritarianism Repressive balance Legislative partisan
Executive balance partisan

Constant Common p OLS R2 Prais R2 Winsten

1.419(3.900) .87 .37* .23*

-1.131 (3.973) .81 .52* .31*

-2.206 (3.905) .81 .53* .32*

standard errors in parenthesis panelcorrected * but signof coefficient two-tailed testdata source, and federalism; p < 05; significant oppositeof directional hypothesis; openness otherwise one-tailed test. N = 446

Discussion and Conclusions

Our main findings of theoretical interest are that determinants of the regimeformsare important amountgovernments and social spend on transfers services. in thelongrunfor matters both Democracy socialsecurity and welfare, and health and education spending.These findings suggestthat democratic of all political are morerespongovernments stripes siveto demands forstateprovision of socialsecurity and welfare, and forhealthand educationservices than are authoritarian governments. Highlyrepressive authoritarian on health regimes keep spending and education low. Interestingly, do not havea they similar effect on socialsecurity and welfare spending. does not matter for the overall Partisanship amount of social expenditures. The difference between governments of varying political colors is in not how much apparently theyspend, but in how theyallocatewhattheyspend.We have qualitativeevidencethat left-of-center partieshave favored programs with progressive such as profiles, and conditional transfer noncontributory programs and school feeding and preventive health programs

care (e.g., the Unidad Popularin Chile,the PT in Brazil,the FA in Uruguay),and we know from studiesthat a left-leaning balance of quantitative in is associated with lower power legislatures inequalthat ity(Huber et al. 2006), whichleads us to infer left governments find it difficult to increasethe overallamountof social expenditures but are more in shaping successful expenditure patterns.14 Our datado notallowus consistently to separate out progressive from kinds of regressive expenditures. For the restricted set of observations forwhichthe IMF providedfigures for social security separately fromwelfare for 13 (120 observations expenditures for the countries, exclusively virtually period1972-82), of our analyses the results showedtheexpected patternof partisanship. remained Democracy positive and significant forboth kindsof expenditures. The balance was for partisan legislative negative thecombinedmeasure is dominated (which bysocialsecurity and for social alone,and spending) security spending
14The ofsocialexpenditures is nottheonlyfactor pattern shaping incomedistribution, ofcourse. Left havealso made governments use of otherpoliciesto protect lowerincomegroups,such as in laborlegislation and theminimum improvements wage.

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both effects weresignificant, and it was positive for ditures withthegrowth ofentitled The grow groups. welfare not but most is the politicalcost of spending, significant. plausibleexplanation Frommanystudies donebyinternational butthelegalanchoring ofsocial entitlements, organ- cutting izations (cited above) we know that most social security schemes to contributes their resilarguably in schemes Latin at America the ience. Other are anchored as well-security beginning rights legally of thetwenty-first are highly Left prominently century regressive. among them the right to public of centergovernments were hardlyin power long educationand healthcare-but theydo not carry of personal entitlement. Moreover, enough duringthe formative years of the social thesame quality schemesto shape theminto redistributive declinesin qualityof educationand healthservices security In the 26 yearsfrom1945to are not experienced instruments as immediately and starkly as originally. data our show one declines in social benefits. Since social 1970, only country, Uruguay, security wherepartiesof the leftand centerlefttogether security schemesprimarily the more privibenefit heldan average ofslightly morethan50% ofseats(a and more cuts would affect leged organized groups, scoreof 14,with13 constituting the 50% mark).In the more politically articulate and influential. The Venezuela and CostaRica,they about40%, examples ofUruguay and Argentina showthepotenaveraged and in Chile about 30%.15Once the social security tialoflarge-scale in defense mobilization of pensioner wereestablished, schemes created their entitlements entitlements, they clearly. very and itbecamevery difficult ofcenter forleft governSpending on health and education is more ments to reallocate to the susceptible resources from to economic and political constraints privileged from social schemes or social and thanspending on social security. general security security opportunities to welfare of democracy drives expenditures. Again,a long record up health are no conclusive of and educationspending, and the effect there studies is stronger Unfortunately, the distributive as schemes than forsocial security and welfare Since impactof social security spending. ofthelate 1970s, theonsetofthedebtcrisis. It we knowthatsignificant before sectors of the middleand at that upperclasseshave opted out of the public systems is safeto assumethatthey werelessregressive in in with sub- and thaton averageoverallpatterns of healthand time countries point import strong and education were stitution industrialization, particularly spending progressive Argentina slightly by the we can attribute therelationship between Uruguaywhere the formalsector was large and late 1990s, In was low. the wake of the debt and to the that democracy opportunities unemployment very spending insize for crisisand structural the of the the of opens adjustment, democracy self-organization the which and their formal madethesocial underprivileged to pushforbetter sector capacity grew significantly, In that health and education services. schemes more everywhere. Highly repressive security regressive crush lower class were held back authoritarian situation, governments regimesgenerally left-leaning and thustheirability to push forexin theirefforts to increase organizations by economicconstraints curtailments of healthand educaandexpand the toimprove schemes pansionor resist general expenditures The fact tion services. thathighly informal sector. to coverthegrowing repressive regimes of keep spending on health and education low but not evidence for thehigh resilience Thereis further can in partbe explained theindicator for on social security socialsecurity Neither by these expenditures. to target deficits the debt crisisnor government predisposition legal,and depressed regimes' physical, at the lowerclassesand bluewhereas social security expenditures, theyboth had economicrepression collarunions,the main usersof publichealthand on health and education significant negative effects and theirreluctance to take on education services, The same is true for repressive highly spending. the middle middle and were reluctant authoritarianregimes;they classes, disproporupper generally of social security schemes.In tionatebeneficiaries schemesbut not to make major cuts in social security of a so in health and education expenditures. partit can also be explained by theprobability the board cuts in across reaction Our analysis shows that for social securityand against stronger of thanagainst declines in thequality socialsecurity welfare spending,demographicsare crucial.Once the and thepossibility ofa and education social security schemesare put into place, theycreate health services, thatare difficult to change, and expen- broadopposition coalition formation. entitlements The stronger impact of economic factorson health and education thanon socialsecurity spending in mind that receive scores for democratic 15Keep parties only and welfare is underlined in nondemocratic spending we obviously wouldnot by the positive periods; periods, left to influence social formation. effect ofGDP percapitaon theformer andthelackof expect parties policy

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POLITICS

AND SOCIAL

SPENDING

IN LATIN AMERICA

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is negatively on the latter.The fact that more vationand changetowards such an effect democracy in spending on socialsecurity withchange shareof resources associated affluent countries devotea greater and the is posavailand mean that to health and education welfare, democracy yearbefore greater may in on associated with a greater share itively ofresources facilitates change spending health devoting ability of GDP. The latter countries with and educationas a percentage or itmaymeanthat to these purposes, is with ours. have a education health and better finding compatible systems supported withthoseof studies Our results contrast human capital base and thus are more starkly stronger in OECD countries, where states deficits and thedebt ofwelfare successful partisaneconomically. Budget In to the addition effect on healthand ship has figured crisisalso had a constraining prominently. to which we will and differences on structural historical in to their effect contrast education expenditures, in we can pointto differences return socialsecurity momentarily, expenditures. of socialexpendi- the timeperiodscoveredby thesestudiesto help theprevious studies As noted, thiscontrast. Studies ofOECD countries to explain turein LatinAmerica are not really typcomparable includethe GoldenAge of postwar and notlevels ically arestudies ofchange becausethey ours, capitalism, oil WorldWar II and the first and only Kaufmanand Segura- the periodbetween of expenditures with the of slowed of include a measure period growth, power shocks,along political Ubiergo(2001) on thewelfare state and fiscal orientation of presidents. globalization, the political distributions, pressures in the 1980s.Thereis some disagreement their is frequently cited,whichcalls beginning However, study in thelatter effects for a briefdiscussion.There are threedifferences overwhether disappeared partisan but there is and Segura's and our owncoding. phaseor whether between Kaufman they persist, agreement ofpresidents orientation regard- that theyhave weakenedunder the politicalconTheycodedpolitical on of entitlements and economic constraints was democratically straints less of whether the president increases. Due to data our the orientaelected or not,16 and we coded expenditure availability, political the in parliament, as wellas of study ofLatinAmerican countries can onlycover tionofparties represented since the that a of democratic Second, 1970s, is, period significant period presidents, periods. onlyduring ori- fiscalconstraints fromslowed economic resulting theyused a dichotomous codingof popularly thedebtcrisis ofthe 1980sand thevolatility we useda left/ growth, basedor not,whereas ented/popularly the These canhelpto explain the above. of 1990s. constraints as Third, they center/right coding, explained effects. on the basis of the founding absenceof partisan coded the orientation The majorreasonsforthe weakness of partisan coalition or constituency of theparty and continued in nature. structural and historical to code parties thesamewayfortheir wholehistory, effects, are though, in As of the left were too weak whereaswe followedthe conventional noted,parties coding generally in OECD studiesand Coppedge's coding that allow to shape social security systems theirformative in classification scale if period, whichin turncan be linked to theweakness forchanges on the left-right their towards their of the record of itself. Partiesof the basic orientation parties democracy change and of and democratic left and center tended to suffer from originalconstituency priorities growth redistribution. and even persecution prohibition duringmanyauKaufmanand Segurafindthatchangetowards thoritarian as did their periods, supportgroupsin the civil them laborunions. not (but populistpresidents incumbency year society, prominently among with in is associated social entered democratic Thus, they before) positively periodsas relatively change and welfare and negatively associ- weak actors.A comparison withWestern security spending European ated withchangein healthand education left of center with their close links to civil spending. parties, thisas attempts and policythinktanks,illusTheyinterpret bypopulist presidents societyorganizations thisweakness well.As the democratic record to protect at theexpense ofinvest- trates pensionspending ment in human capital (2001, 580). This interpreta- gets longer,and if left-leaning partiesalong with tion is compatiblewithour interpretation thathealth other democratic institutions manageto consolidate, and education spending is more vulnerable than we shouldexpectstronger on social effects political social securityand welfare spending. They further policy also, particularly if the region experiences findthat both democracythe year beforethe obsereconomicstability and growth thanoverthe greater past25 years. If we keep in mind thata left-leaning partisan their in 1973,includes themilitary which 16Thus, analysis, begins the balance doesdepress over thelonger run, inequality and of 1973-75in Peruand of 1973-79in Ecuador, presidencies since 1973. all Mexicanpresidents absenceof partisan effects on the levelof spending

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434

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HUBER,

THOMAS

MUSTILLO,

AND JOHN D. STEPHENS

Nathaniel and Jonathan N. Katz.2004."Time-Series-CrossBeck, Section Issues: 2004." Presented to the annual Dynamics, difficult toraise new inaneconomic revenue environof the SocietyforPoliticalMethodology, Stanford meeting where ment bothfinancial and human are capital University. andpolitically in- Beck,Nathaniel concentrated, mobile, highly highly and Jonathan N. Katz. 1995."Whatto do (and Not to Do) withTime-Series-Cross-Section andthat Data in Comthese instead tochange fluential, parties push Politics." American Political Science Review89 (3): parative the structure ofspending tomake itmore progressive. 634-47. alsoseek andregulatory topromote They legal changes and Jonathan Nathaniel N. Katz. 1996."Nuisance vs. Subtheinterests oftheunderprivileged. In thebest ofall Beck, stance:Specifying and Estimating Time-Series-Cross-Section records ofdemocracy will be accompaModels."Political 8: 1-36. cases, longer Analysis a nied of political by strengthening parties, particularlyBonoli,Giulianoand AndreMach. 2000. "Switzerland: AdjustwithInstitutional Constraints." In Welfare and those the andcommitted mentPolitics representing underprivileged Work in theOpenEconomy. Volume Diverse to Responses II. to redistributive social policyand investment in Common ed. Fritz and VivienA. Challenges, Scharpf Scharpf human which a virtuous could Schmidt. Oxford Oxford: capital, putinmotion Press,131-74. University human economic Bradley,David, EvelyneHuber, StephanieMoller, Franois cycle amongdemocracy, capital, 2003. "Distribution and RedisNielsen,and John andhuman welfare. Stephens. development, tribution in Post-industrial Democracies." World Politics 55 193-228. (January): 1999."Democracy and Social Hunter. Brown, David,andWendy Political Spendingin Latin America,1980-92." American Science Review 93 (4) : 779-90. We acknowledge the supportof National Science Foundation Grant #SES-0241389. We wouldalso like Brown,David, and Wendy Hunter.2004. "Democracyand Human Capital Formation: Education Spendingin Latin to thank Alexander Victoria Hicks,Robert Kaufman, 1980-1997."Comparative Political 37 (SepStudies America, in the and the participants Murillo,KurtWeyland, 842-64. tember): Politics 1999."Decentralization Francis. and thePost-war PolitComparative Working Groupat theUniver- Castles, ical Political 36 Research Journal (1): North for of comments Economy." European of Carolina,Chapel Hill, sity 27-53. on previousdrafts. Huber and Stephens thankthe 1982. (ed.) TheImpactofParties. Francis. Hills: Castles, Beverly forAdvanced in Hanse Institute Delmenhorst, Study Sage. for and a stimulating environment Germany, support and Peter Francis Mair.1984."Left-Right Scales: Castles, Political in whichto workon thisstudy, as well as UNCSome 'Expert' Judgments." EuropeanJournalof Political Research 12: 73-88. and study leaves. ChapelHill forresearch Colomer,JosepM. and Luis E. Escatel.2004. "The Left-Right Dimensionin LatinAmerica."Mexico City:CIDE, Centro 18 August submitted 2006 Manuscript de Investigaci6n y Docencia Econ6micas.WorkingPapers, 7 September 2007 Manuscript accepted forpublication SDTEP 165. in LatinAmerica: 1996."Social Expenditure Rossella. Cominetti, An Update."Santiago, Chile:CEPAL Technical Department. of Latin American Coppedge,Michael.1997. "A Classification PoliticalParties."WorkingPaper Series #244.The Helen for ofNotre Institute International Studies. University Kellogg Dame. 2000. "Why LaggedDependentVariables Achen,Christopher. Powerof OtherIndependent Cusack,ThomasR. and SusanneFuchs.2002."Documentation Can Suppress the Explanatory Data Set." and Legislatures oftheSociety Notes forParties, for Variables." Presented at theannualmeeting Governments, Berlin Wissenschaftszentrum fuer Political UCLA. Sozialforschung. Methodology, eds. 2001. AlcantaraSaez, Manuel and Flavia Freidenberg, De Ferranti, E. Perry, FanciscoH.G. Ferreira, David, Guillermo Partidospoliticosde America Latina. Salamanca, Spain: and Michael Walton. 2004. Inequality in Latin America: Universidad de Salamanca. Ediciones with The WorldBank. History? Washington: Breaking Manueland Cristina Rivas.2006."The Left-Right ECLAC.2004.SocialPanorama Alcantara Chile: ofLatinAmerica. Santiago, Saiez, America and United Nations Economic Commission for Latin in Latin Presented at the Dimension American Politics." Party Association. theCaribbean. oftheAmerican Political Science annualmeeting Charles Parties America. 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partieshave found it suggeststhat left-of-center

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of Huberis Moreheadalumniprofessor Evelyne Carolina at of North politicalscience,University ChapelHill,ChapelHill,NC 27599.ThomasMustillo

of politicalscience,Indiana is assistant professor IN 46202. at Indianapolis, University Indianapolis, E. is Gerhard Lenski,Jr.distinJohnD. Stephens of of University guishedprofessor politicalscience, North Carolina at Chapel Hill, Chapel Hill, NC
27599.

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