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

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.