The effect of institutional factors and people's preferences on expenditure for social protection

This article analyses whether and to what extent social protection expenditure varies with institutional quality and people's preferences using cross-section and cross-country panel data. It uses data on expenditure taken from the International Labour Office database focusing on 52 low- and middle-income countries and on 80 high-, low- and middle-income countries. The results show that both factors have an impact for the group of low- and middle-income countries, but also for all the countries in the sample. The estimates are robust to different definitions of the dependent variables and different measures for the quality of institutions. Our results suggest that it is worthwhile to continue enhancing the capacity of institutions and public authorities as well as to channel people's preferences on social protection interventions into the planning and budgeting process where the decisions on social protection programmes are taken and resources allocated.