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Social Expenditure in Central America, Panama and the Dominican Republic at a Glance: 2007-2013

Marco Solera, Esteban Durán, Jordi Prat, Víctor Dumas, Mariano Lafuente, Martín Ardanaz, Priscilla Gutiérrez Juárez, Jorge Vargas Cullell and Javier Beverinotti

No 7495 in IDB Publications (Books) from Inter-American Development Bank

Abstract: Social spending is a powerful tool to reduce poverty, achieve higher equality and better life conditions for the inhabitants of a country. In "Social Expenditure in Central America, Panama and the Dominican Republic: 2007-2013", a characterization of the different variables that have taken social expenditure to its current position is performed. During the economic crisis period, many governments of the region confront this situation with an increase in social expenditures. However, part of the increase was centered on inflexible items, particularly wages, which facilitated the increase in fiscal deficits and, consequently, on public debt. Thus, after the financial crisis, the fiscal situation has reduced governments' buffers to respond to economic shocks, which imply that we need to examine the fiscal policy given its rigidity, the scarcity of public resources and the institutional contract. The study of wage bill increases provides more information related to the causes of this dynamic, and allow us to offer recommendations to improve spending management without threatening public finances. A better use of resources could contribute to define a more efficient and equitable agenda for the countries in the region. Finally, something that was not deeply explored, as of today, is the institutional complexity and how this could facilitate, or hinder, the government's ability to express its fiscal policy, including the effectiveness in the use of public resources.

Keywords: wages; wage bill; public sector; institutionality; public expenditure; efficiency; Central America; social expenditure; health spending; education spending (search for similar items in EconPapers)
JEL-codes: H53 H52 H51 H4 H3 H1 (search for similar items in EconPapers)
Date: 2016
ISBN: 9781597822510
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