Inequality, social spending and the state in Latin America

Most Latin American countries have extensive social policies which absorb high levels of state spending. Despite this, Latin America continues to suffer from high levels of inequality in terms of income and access to basic services. This chapter explores this apparent paradox. It focuses on three aspects of social policy in the region: patterns of resource allocation, the distribution of welfare entitlements and differing capacities to take advantage of these entitlements. It applies this framework to study the distributional effects of health and social security policies, and shows that these three effects combine in various ways to benefit higher income groups and exclude the poor. Recent changes have marginally improved provision for low-income groups, but the fundamentally inegalitarian nature of social policy remains largely unchanged.