The succession of reports and news on the extent of inequality and poverty in Spain leaves few doubts about the magnitude of both problems. The most recent, published by the la Caixa Foundation, is telling: the percentage of citizens below the threshold of risk of poverty is much higher than that of the majority of the countries of the EU, almost one in every three people has income below what is necessary to achieve a balance with their expenditure and job insecurity causes that many people face significant falls in income each year. Added to this is that the number of households with no income, more than 617.000 currently, it has not stopped growing in the last four quarters, unlike what happened with the unemployment rate.
These data cannot be disconnect from the weakness of our redistributive policies. The resources invested are significantly lower than the EU average and the ability of the monetary benefits to reduce inequality is considerably lower. This reality leads us, inevitably, to reflect on two types of issues: the need to provide greater budget resources to these policies and the search for the best design to increase their effectiveness. The first thing is sufficiently known. As shown by various reports of the European Commission, the weight of the cash benefits and taxes on income of Spanish households is small in terms compared. The question, therefore, is not whether social spending should be increased, condition is obvious and necessary, but how to fund and design the increase.
there is, however, an optimal formula, adaptable to different countries or time periods, on what combination of taxes and benefits makes it possible to reduce more the inequality. 20 years ago, Walter Korpi and Joakim Palme, two sociologists swedes, came to the conclusion that in order to achieve a greater redistribution became less effective, the political Robin Hood, who transferred money from the rich to the poor, with benefits targeted to the universal benefits that reach broad layers of the population.
Such a result can be explained because the social protection systems of orientation universal receive a far bigger support of the citizenship, which allows to increase the public expenditure devoted to the correction of the inequality without increasing the public deficit by the greater disposition to accept the payment of taxes. On the contrary, the policies that are more selective are conducive to social protection systems are smaller and less redistributive. Would the paradox, therefore, that a country could achieve further reduction in inequality when the entire population pays for and receives that when it takes resources from the rich to give to the poor.
The question is not whether social spending should be increased, condition obvious, but how to finance that growth.
To this lower redistributive impact of benefits most selective join, in addition, some of the problems involved in their management. By definition, require the verification of resources to be able to get them, which increases the costs of information and monitoring and can lead to feelings of stigmatization among the beneficiaries that would reduce the demand for these services. Having to overcome, in addition, the verification test of resources can reduce incentives to accept some jobs or to increase the hours worked by the fear of the loss of the provision to increase the income of the household.
Some recent studies, however, leave the debate more open than might be inferred from the above and show that, in some countries and in certain periods of time, these strategies selective do contribute to reducing inequality, although the results are not conclusive. Probably, what is happening is that the relations between the distributive and the public policies have become more complex. On the one hand, inequality has increased in several european countries and the political coalitions that used to support redistributive policies more ambitious have been transformed, with a containment of expenditure on benefits and universal social services. On the other, the reforms of the benefits selective, more linked to the processes of activation or the development of wage subsidies, have made that they receive a greater social support by the citizens. The welfare States of today, in addition, are different from those of the eighties, with more hybrids and a distinction less clear between universal benefits and selective. Some papers show, in fact, that certain benefits selective in universal frameworks of social protection may have distributional effects significant.
The question is, again, if there is an ideal model that can be replicated seeing that the experiences in different countries are so disparate. Universal benefits properly guaranteed have an effect redistributive higher in the nordic countries and in some central-european. In contrast, in the anglo-saxon features selective appear to reduce more the inequality that the universal. We must not forget, in this context, that the possible connection between the universal character of the performance, the relative volume of social spending and its redistributive impact is only a part of the knot wider relations that explain the inequality.
In the most recent period, many countries have rethought their strategies redistributive. The ineffectiveness of some of the actions taken, given the persistence of inequality and the realisation of serious problems in the allocation of benefits, has forced the search for designs most effective of these policies. That experience should serve as a reference for countries like Spain, where the margins for action are still very large and where the development of the welfare State in recent decades has been giving increasing weight to the benefits on a selective basis. In our case, to incorporate higher doses of universality to the system, such as, for example, in the field of family benefits, it could be one of the possible strategies for the development of redistributive policies more ambitious.
Luis Ayala is a professor of Economics at the Universidad Rey Juan Carlos