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Social spending, investment in human capital and democracy in Latin

14th National Competition for Economic Research Grants

Economic history

Senior Researcher : Sergio Espuelas Barroso

Research Centre or Institution : Universidad de Barcelona.


Many political leaders in the 19th century restricted the right to vote to property-owning men, convinced that if the poor were able to vote they would very rapidly expropriate the rich (Roemer 1998). The arrival of universal suffrage did not exactly have the effects they anticipated. However, the levels of redistribution are clearly higher now than one hundred years ago, and the relationship between democracy and social policy continues to prompt debate. While some authors maintain that democracy favoured the growth of social spending (Lindert 2004), others consider that political and institutional variables did not play any relevant role in this regard (Mulligan et al. 2010). The lack of democracy remains a reality in many countries, and it has determined past and present social policies in many others. However, comparative studies on the Welfare State have basically focussed on democratic countries. The aim here is to expand the analysis beyond developed countries, analysing the impact of non-democratic governments on social spending in Latin America between 1913 and 2005, based on a group of indicators for the degree of political freedom that is more detailed than the usual dummy variables. The second aim is to analyse whether non-democratic governments slowed down economic growth by reducing investment in human capital, as Tavares and Wacziarg (2001) suggested. Many governments in the 21st century chose not to increase spending on education even when the fiscal returns from education would have offset the initial cost of that investment, thereby failing to seize an opportunity to escape underdevelopment (Lindert 2009). The aim is to ascertain whether there was in fact under-investment in education in Latin America between 1913 and 2005 and, if there was, whether it is explained by the impact of non-democratic governments.

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