Effectiveness and Equity in Social Spending - The Case of Spain

IMF Working Papers, January 30, 2020

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Spain faces sustained economic and social disparities across several areas.
Social spending must respond amid constraints from high public debt and pressures from an aging society.
The study takes stock of the level and effectiveness of public social expenditure from a cross-country and macroeconomic view, complementing recent targeted spending reviews.

Social protection spending should aim to improve redistribution by better targeting the most vulnerable.
Education and active labor market policies need to be more effective to create more equal opportunities and income prospects.
In some areas, more fiscal resources are needed to achieve objectives.
Social spending alone cannot reduce inequality; efforts must also be directed toward making the labor market more inclusive.

Improve targeting of social protection spending to enhance redistribution toward the most vulnerable.
Strengthen the effectiveness of education policy to expand equal opportunities.
Enhance active labor market policies to improve income prospects and labor market inclusion.
Allocate additional fiscal resources where necessary while addressing public debt and demographic pressures.
Pursue complementary labor-market reforms to increase inclusiveness alongside social spending measures.