Scholarlink

<p>This study examines the relationship between social expenditures and fiscal balance in 27 European Union member states over the period 2000–2022. Using a panel data framework, the analysis focuses on four disaggregated categories of social expenditure: health, education, pensions, and social protection. The study employs the Dumitrescu-Hurlin panel causality test to identify the direction of causality and applies Generalized Method of Moments (GMM) estimations to address potential endogeneity issues. The results reveal a unidirectional causal relationship running from fiscal balance to social expenditure categories. In addition, the findings indicate that fiscal balance exerts a significant constraining effect on all dimensions of social spending: improvements in fiscal balance (i.e. reduced deficits) are associated with decreases in social expenditures. Demographic factors also play an important role. Population ageing increases spending on pensions, health, and social protection, while a larger young population is associated with higher education expenditures. Institutional quality-measured by the rule of law-and national income positively influence social spending, whereas domestic savings and inflation have negative effects. Unemployment reduces spending on health and education but increases expenditures on social protection. Overall, the results highlight a fundamental policy dilemma: fiscal consolidation pressures may conflict with the need for social protection, particularly in the context of ageing European populations. By providing the first comprehensive analysis of how fiscal balance simultaneously affects multiple dimensions of social expenditure in EU countries, this study offers important insights for policymakers seeking to reconcile fiscal sustainability with inclusive social policy frameworks. The findings suggest that fiscal rules should be designed to safeguard essential social investments while maintaining budgetary discipline.</p>

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

How does social expenditure affect the fiscal balance in European Union countries?

  • 期刊论文

  • 发表日期：

    2026年7月24日

查看全文
  • Suat Hayri Sentürk,
  • Birol Karakurt,
  • Nazli Keyifli Sentürk

摘要

This study examines the relationship between social expenditures and fiscal balance in 27 European Union member states over the period 2000–2022. Using a panel data framework, the analysis focuses on four disaggregated categories of social expenditure: health, education, pensions, and social protection. The study employs the Dumitrescu-Hurlin panel causality test to identify the direction of causality and applies Generalized Method of Moments (GMM) estimations to address potential endogeneity issues. The results reveal a unidirectional causal relationship running from fiscal balance to social expenditure categories. In addition, the findings indicate that fiscal balance exerts a significant constraining effect on all dimensions of social spending: improvements in fiscal balance (i.e. reduced deficits) are associated with decreases in social expenditures. Demographic factors also play an important role. Population ageing increases spending on pensions, health, and social protection, while a larger young population is associated with higher education expenditures. Institutional quality-measured by the rule of law-and national income positively influence social spending, whereas domestic savings and inflation have negative effects. Unemployment reduces spending on health and education but increases expenditures on social protection. Overall, the results highlight a fundamental policy dilemma: fiscal consolidation pressures may conflict with the need for social protection, particularly in the context of ageing European populations. By providing the first comprehensive analysis of how fiscal balance simultaneously affects multiple dimensions of social expenditure in EU countries, this study offers important insights for policymakers seeking to reconcile fiscal sustainability with inclusive social policy frameworks. The findings suggest that fiscal rules should be designed to safeguard essential social investments while maintaining budgetary discipline.