Fiscal imbalances, electoral competition and popular contention: The politics of subnational workfare spending in Argentina, 2003-2009

This paper examines the determinants of workfare programs spending among the twenty-four Argentine provinces from 2003 to 2009. After the 2001 economic crisis, unemployment became the major political challenge for both national and subnational policy-makers in the country. In the following years, the Argentine federal government rapidly increased public expenditures in cash transfers targeted to the unemployed and informal workers, in order to provide temporary social protection to labor-market outsiders. Spending in workfare programs at the subnational level, however, varied widely: while some provinces considerably increased social funds in these programs, some others did it in a more nuanced or limited way.

By taking advantage of the literature on federalism and social policy, on the one hand, and conditional cash transfers in Latin America, on the other hand, this article aims to explore variables at the subnational level that have been useful in explaining varying spending patterns across national cases. In accordance with these literatures, this paper demonstrates that larger fiscal transfers from the federal government, greater electoral competition, and higher levels of protest and social movements’ activity lead to increasing spending in provincial workfare programs. In contrast, higher redistribution of national employment programs to the provinces disincentivizes spending efforts in subnational social policies, leading to decreasing workfare expenditures. 

In short, in a decade marked by a sharp spread of conditional cash transfers throughout the Latin American region, this study attempts to demonstrate how the institutional, political and socioeconomic attributes of a federation’s subnational units might shape social policy outcomes in periods of welfare expansion.