Determinants of Social Expenditures in OECD Countries

Such as education, health, unemployment and income distribution, where free market investments can be inadequate; regulatory agencies prevent social problems by intervening in the market with social spending. The aim of this study is to examine the economic, demographic and political determinants of the social expenditure of 33 OECD countries between 2007 and 2014. Thus, by analyzing the main factors affecting social spending, it is aimed to make these expenditures in the direction of the planned framework, least affected by external factors. For this reason, the fixed effect method and the system GMM method are used. According to the estimated results, social expenditures are slowly changing over time. Inflation affects social spending negatively. Unemployment affects social spending positively. These results are statistically significant in terms of economic variables. One of the important factors affecting social spending is the percentage of young and old population in working population. According to the results, political variables have no significant effects on social expenditures