Luis Ayala Cañón

Economic Downturns, Endogenous Government Policy and Welfare Caseloads

Governments can soften the impact of the business cycle on welfare spending. Depending on the political costs and the extent of unemployment, they might choose between a decrease in the proportion of accepted applications, a decrease in the level of benefits, or some combination of the two. This paper is motivated by this concern, weaving together the intensive literature on the determinants of welfare caseloads and the fundamentals of public choice theory applied to the design of welfare programs. The paper is based on data from the minimum income program of Catalonia’s government (PIRMI). We use autoregressive distributed lag models to find that the generosity of the program is clearly predictive of the receipt of benefits even in contexts of high and growing unemployment rates. We also find a fairly strong correlation between unemployment growth and the proportion of rejected applications and a trade-off between the level of benefits and rejections.

La descentralización territorial de los sistemas de garantía de rentas

This paper considers to what extent the Spanish model of means-tested benefits causes regional inequalities in the coverage of low-income households. The Spanish model is often assumed to be a normal experience among the European Welfare States. This fact is put into question reviewing different schemes of decentralisation. Different empirical exercises are put into action to evaluate both the inequality effects of centralised benefits (non-contributory pensions) as well as those inequalities intrinsically linked to completely decentralised anti-poverty programs (regional minimum income programs). The empirical results show substantial inequalities raised by both institutional designs. It is necessary the search for a new model reducing the extreme design of the present systems.