Should Countries Engage in a Race to the Bottom? The Effect of Social Spending on FDI

This paper examines the effect of social spending in developing countries on foreign direct investment (FDI). Existing studies on the race to the bottom in social services attempt to discern the extent to which FDI affects social expenditure. However, it remains an open question whether FDI is actually attracted to lower spending levels. We find no indication that FDI is repelled by social spending; indeed there is strong evidence that investment is associated with greater programmatic emphases on health and education. These findings have important implications for leaders seeking to attract investment and for those attempting to expand social programs.

Public Attitudes Toward Social Spending in the United States: The Differences Between Direct Spending and Tax Expenditures

This paper uses a survey experiment to examine differences in public attitudes toward 'direct' and 'indirect' government spending. Federal social welfare spending in the USA has two components: the federal government spends money to directly provide social benefits to citizens, and also indirectly subsidizes the private provision of social benefits through tax expenditures. Though benefits provided through tax expenditures are considered spending for budgetary purposes, they differ from direct spending in several ways: in the mechanisms through which benefits are delivered to citizens, in how they distribute wealth across the income spectrum, and in the visibility of their policy consequences to the mass public. We develop and test a model explaining how these differences will affect public attitudes toward spending conducted through direct and indirect means. We find that support for otherwise identical social programs is generally higher when such programs are portrayed as being delivered through tax expenditures than when they are portrayed as being delivered by direct spending. In addition, support for tax expenditure programs which redistribute wealth upward drops when citizens are provided information about the redistributive effects. Both of these results are conditioned by partisanship, with the opinions of Republicans more sensitive to the mechanism through which benefits are delivered, and the opinions of Democrats more sensitive to information about their redistributive effects.

Democratization, Education Reform, and the Mexican Teachers' Union

This study examines the effect of democratization on a key education reform across three Mexican states. Previous scholarship has found a positive effect of electoral competition on social spending, as leaders seek to improve their reelection prospects by delivering services to voters. However, the evidence presented here indicates that more money has not meant better educational outcomes in Mexico. Rather, new and vulnerable elected leaders are especially susceptible to the demands of powerful interest groups at the expense of accountability to constituents. In this case, the dominant teachers' union has used its leverage to exact greater control over the country's resource-rich merit pay program for teachers. It has exploited this control to increase salaries and decrease standards for advancement up the remuneration ladder. The evidence suggests that increased electoral competition has led to the empowerment of entrenched interests rather than voters, with an overall negative effect on education.