CSB Working Paper, 2012, 8: Are new social risk expenditures crowding out the old?

This paper contributes to a discussion on the extent to which the focus of social spending has been shifted from ‘old’ to ‘new’ social risks. In order to clarify Cantillon’s claim that the transition to a social investment state has influenced poverty trends (Cantillon, 2011), Vandenbroucke and Vleminckx (2011) analyzed public social cash expenditures. We build on this work by providing more detailed data, i.e. the inclusion of private expenditures for a larger group of countries. This paper pro…

This paper contributes to a discussion on the extent to which the focus of social spending has been shifted from ‘old’ to ‘new’ social risks. In order to clarify Cantillon’s claim that the transition to a social investment state has influenced poverty trends (Cantillon, 2011), Vandenbroucke and Vleminckx (2011) analyzed public social cash expenditures. We build on this work by providing more detailed data, i.e. the inclusion of private expenditures for a larger group of countries. This paper provides country files containing both public and private expenditure variables that present the evolution of social spending in 21 EU member states covering the period 1985-2007. For each country a distinction has been made between three categories of ‘old’ expenditures and six categories of ‘new’ expenditures, with ‘old’ expenditures representing the core tasks of the welfare state and ‘new’ expenditures representing new programs aimed at social risks inherent to a post–industrial society. These data allow us to formulate an answer to the following question: ‘Have we witnessed a significant shift in budgetary resources from ‘old’ to ‘new’ programs that might explain the disappointing poverty trends witnessed in various EU member states?’.
Using data from the OECD’s Social Expenditure Statistics Detailed Database (SOCX) and the OECD’s Education Database, we conclude that although growth of ‘new’ expenditures has been larger than the growth of ‘old’ ones, we are not able to identify a substantial shift in absolute figures. Since health and retirement spending remain the main bulk in social expenditures (due to their inflexible nature), we narrowed the analysis and focused only on ‘working age’ benefits. Doing so, we still are not able to identify a clear pattern that reveals a shift in resources from ‘old’ to ‘new’ expenditures. Our conclusions are in line with previous studies.