This paper examines the factors that influence regional governments' social spending choices and uncovers how these choices in turn affect national welfare outcomes. The empirical analysis is based on a novel dataset that collects data on regional social welfare spending in 14 OECD countries over 20 years. A multi-level analysis shows that both the ideological orientation of the regional government and the affluence of the region have a strong effect on regional social policy generosity. The paper further analyzes how the macro-institutional context conditions the effect of these two factors. The findings show that both factors have a stronger effect on regional social spending the more decentralized the country. This in turn suggest that the more decentralized a country, the more the differences regional context translate into differences in social policy generosity, which in turn generates substantial regional inequalities in social welfare.
