Countries of CEE are to this day characterized by significant divergence in the level of social spending as a share of GDP. This divergence emerged in 1990s and largely persists to this day. This paper investigates the sources of this diversity and its persistence since the 1990s. The paper argues that diversity in social spending is a consequence of variation in institutional development of the welfare state in pre-communist and communist period, strength of the opposition during communism and severity of economic crisis during transition.
The paper argues that countries where Bismarckian systems of social security where established and maintained institutional continuity during communist period, where societal opposition to communism was strong and where crisis of economic transition was not severe, developed more generous welfare states in the post-communist period. On the other hand, weak institutional continuity of the welfare state from the pre-war period, weak opposition mobilization under communism, provision of social security through state owned enterprises and official trade unions, and severe contraction of GDP during transition resulted in a small overall welfare effort and institutionally weak welfare state.
The paper examines this proposition combing quantitative analysis of determinants of welfare state spending after 1990 with qualitative analysis of welfare state development in CEE countries since the beginning of the 20th century.
