Context means conditionality in the sense that the effect of a cause on an outcome tends to vary across contexts. By applying this idea to the analysis of institutions, the new institutionalism contends that the effects of social structures are shaped by the institutional structure of the economy and polity (Hall & Taylor 1996). As Hall (1986: 19) states in one influential statement:
26 An interaction effect hypothesis states that the effect of one variable on a second one depends on the value of a third variable. This third factor is labeled a moderator variable because the first-order relationship is moderated. That is, it changes as the moderator variable changes. A variable operates as a mediator to the extent that it accounts for the relationship between an independent variable and an outcome. In this dissertation, I consider the institutional context only as a moderating variable that influences the association between social policy and poverty.
35 “The concept of institutions is used here to refer to the formal rules, compliance procedures, and standard operating practices that structure the relationship between individuals and various units of the polity and economy…Institutional factors play two fundamental roles…[They] affect the degree of power that any one set of actors has over policy outcomes […and they…] influence an actor’s definition of his own interests, by establishing his institutional responsibilities and relationship to other actors…With an institutionalist model we can see policy as more than the sum of countervailing pressure from social groups. That pressure is mediated by an organizational [i.e., institutional] dynamic that imprints its own image on the outcome. ”27
Thus, in an institutional analysis, institutional contexts are variables that shape the processes, translating the social structures of interest into effective political pressures, these pressures into government responses, and those policies into social outcomes (Franzese 2007: 48). In this dissertation, I analyze the impact of the institutional context on this last association - the relationship between social policy and outcomes. Following the contemporaneous welfare state theory (Castles 1993, Esping-Andersen 1990, Korpi & Palme 1998), I use the term “institutional context” to designate clusters of welfare states and to contend that the impact of public transfers on social outcomes, particularly poverty, varies across different clusters in Latin America. To identify these clusters, I develop a typology of ideal welfare states and classify LACs into the identified types (Chapter 2).
In general terms, typologies have several components. One of the core elements is the overarching or primary concept measured by the typology (Collier et al. 2008). In my typology, the overarching concept is the “welfare state.” To define this concept, it is very important to recognize that the welfare state is a “nebulous yet sharply contested concept” (Esping-Andersen 1994: 712). Correspondingly, one finds disputes over the appropriate meaning and definition of the welfare state. In broad terms, conceptualizations of the welfare state can be divided into social rights,
27 The text in square brackets is not in Hall’s original statement. Because I do not present the complete statement, I added the text in square brackets to aid in understanding the original statement.
36 outcome, and policy definitions. To construct the typology of welfare states, I use a policy definition and define the welfare state as the sum total of a nation’s social policy repertoire, consisting of political interventions into the functioning of the economy and the societal distribution of life chances that seek to promote the security and equality of citizens in order to foster the social integration of modern societies (Alber 1988: 456). Equalization of opportunities is usually accomplished through public health and educational systems, whereas equalization of results (mainly income) and security against social risks—associated with poverty, sickness, old age, and unemployment—are accomplished through public transfer programs (Castles 1998, Flora & Heidenheimer 1995).28 According to this policy definition of the welfare state, if a state provides cash benefits and social services to citizens, it is defined as a welfare state.
By using a policy definition, I avoid the problem of conceptual stretching that arises when a given concept is applied to cases for which it is not appropriate. Even the poorest Third World nations have some form of public transfers and social services, which is not the case for social rights-based definitions. Defenders of this last type of welfare state conceptualization contend that social citizenship constitutes the core idea of the welfare state (Esping-Andersen 1990). The idea of social citizenship suggests that the entire social community can claim social rights without having to demonstrate economic need (for example via a means test). However, the extension of social rights —such as protection against social risks (unemployment, old-age, sickness) and improving human capital—is limited in Latin America, where large segments of the population lack access to even the most basic public programs. As Esping-Andersen (1994: 713) points out, “The concept [social citizenship] can hardly be stretched beyond the eighteen to twenty rich capitalist countries in the Organization for Economic Cooperation and Development area.” The limited extension of social rights in Latin America indicates that a policy definition of the welfare state is more appropriate than a social rights definition to understand welfare systems in this region.
Outcomes definitions emerged in the context of the debate about welfare state retrenchment in the 1990s and the 2000s in advanced western democracies. In this setting, the welfare state is
28 Price controls and subsidies have constituted important instruments of social protection in Latin America. However, most studies on social policy in this region have not included analyses of both instruments (Huber & Bogliaccini 2010).
37 defined with reference to certain outcomes. For instance, Korpi and Palme (2003: 428) conceptualize the welfare state in terms of policies to affect the outcomes of distributive processes in the sphere of markets. According to this definition, these authors consider the level of employment as an indicator of the welfare state. Clayton and Pontusson (1998) provide another example that includes social inequality as a dimension of the welfare state. However, outcome definitions are not free of problems. One of the most important difficulties is that many factors other than government interventions affect outcomes. For instance, in economic science, the Phillips Curve shows an inverse relationship between unemployment and inflation in an economy. The multi-causal character of socio-economic outcomes indicates that scholars have to take care with the interpretation of changes in, for instance, inequality and employment as a result of government programs. A second problem of outcome definitions is that this type of definition of the welfare state is inappropriate for analyzing the impact of the welfare state on social outcomes. If analysts wish to study the causal relationship between the welfare state and social outcomes, then the latter must be excluded from the conceptualization of the former.
A second element of a typology is the dimensions around which the typology is organized. In Chapter 2 of this dissertation, the particular types of welfare states are derived from three dimensions. The first dimension is the instruments by which the welfare state pursues its goals. According to my conceptualization of social policies, I distinguish between social assistance transfers, social insurance transfers, and the public provision of social services (Section 1.3). The second dimension is the “public-private mix,” that is, the way in which welfare production is divided among the state, market, and family (Esping-Andersen 1999). Finally, the third dimension is “labor relations,” comprising modes of bargaining between collective actors, such as the state, organized labor, and associations of employers.
In Chapter 2, I identify four types of ideal welfare states on the basis of these three dimensions. The types are understood as full instances of the root definition of the welfare state; at the same time, they are differentiated by having more defining attributes. The first type is the corporatist welfare state, in which the main provider of welfare is the family, while the state performs a subsidiary function. This type is also characterized by corporatist labor relations and by a focus on
38 social insurance transfers. The universal welfare state is another type. Like the former, labor relations are corporatist. However, the main welfare source is the state, and the main instruments of public intervention are social services. The last two ideal types are the liberal and the productivist welfare states. In the liberal type, labor relations are pluralist, taking the form of agreements between diverse and competing private organizations; meanwhile, the state upholds the principle of non-intervention, leaving the market as the main provider of welfare. The main instruments of public intervention in this ideal type are social assistance transfers. Finally, the productivist type is characterized by a focus on the commodification of the labor force through public investment in social services. Labor relations are also corporatist in this type, but the cooperation between labor and capital is at the firm level. The state and market share the role of the central welfare provider in the productivist welfare state.
To determine the ideal types of welfare states into which Latin American countries can be categorized, I created measures that capture the dimensions of the ideal typology related to the instruments of the welfare state and public-private mix. A lack of data precludes the inclusion of information on labor relations. I collected information on seventeen Latin American countries for the 1990s and used the statistical technique of “hierarchical-agglomerative” cluster analysis to classify the countries. Table 1.4 shows the measures that operationalized the dimensions of the typology that were used to identify the ideal models operating in Latin America. The four measures are continuous variables. In the rest of this section, I briefly present the measures of welfare state types. Chapter 2 discusses the measurement validity of the variables in detail.
The indicator of the role of the market in the public-private mix is the average private expenditures on health as a percentage of total expenditures on health for the period from 1995- 1999. This variable captures the liberal emphasis on the market with reference to the importance of private efforts in the health sector. The role of the state in the public-private mix is operationalized by the average of the coverage rates of public pensions and the coverage rates of public healthcare programs for particular years of the 1990s. This indicator captures program universalism. One of the core characteristics of the corporatist welfare state is a subsidiary role in the public-private mix. This role of the state produces status segmentation. To measure this characteristic, I developed an
39 index that assesses program segmentation in terms of the number of significant pension programs in 1993. To compensate for differences related to the focus on social insurance among Latin American welfare states, the number of pension programs is weighted by social insurance spending as a percentage of total social spending in 1993. The higher the score in the index is, the higher the status segmentation of a welfare state is. Finally, with respect to the aims of economic growth and the international competitiveness of the country’s economy, the productivist welfare state stimulates the commodification of the labor force by providing social services—particularly healthcare and education. To capture the focus on social services as an instrument of the welfare state, I used the average health and education spending as a percentage of total public spending for the period from 1990-1999. A productivist welfare state should present a high score for this variable.
Table 1.4. Indicators of the typology’s dimensions
Dimension Indicators Level of aggregation Chapter
Role of the market in public- private mix Private expenditures on healthcare as a percentage of total expenditures on health Country 2
Role of the state in public- private mix
The average between coverage rates of public
pensions and coverage rates of public healthcare
programs
Country 2
Subsidiary role of the state in public-private mix and focus on social insurance
Summary index of status segmentation
Country 2
Focus on social services Average health and
education spending as a percentage of total public
spending
Country 2
Cluster analysis does not use only one variable to identify clusters of countries but, instead, uses all of them. The profiles of the clusters (e.g. corporatist) are then recognized by identifying the variables for which the clusters present high levels. In Chapter 3, I assess the role of clusters as moderators by using dummy variables for the groups of welfare states identified in cluster analysis. The goal of this operationalization is to examine how the institutional context shapes the impact of public transfers on poverty levels with data for the period from 1980-2000. An alternative approach
40 is to analyze the continuous variables used in the cluster analysis as independent variables in the regression analysis of policy impact in Chapter 3. Unfortunately, with the exception of expenditure data, there are no time-series data for the variables used in the cluster analysis. It follows that, if I used these variables in policy impact analysis, I would have scarce degrees of freedom, so the analysis may have a problem with robustness of findings, insofar as I should include only a small number of control variables.
1.6 Micro-Macro Explanations of the Impact of Public Transfers and the Public Provision of