Fiscal Decentralization and Social Sector Spending: The Moderating Role of Women’s Political Representation and Gender Quotas

The literature on fiscal decentralization shows mixed effects on social sector spending. This paper examines whether gender-inclusive governance moderates this relationship, hypothesizing that women’s parliamentary representation strengthens the positive effect of fiscal decentralization on social sector spending. Using panel data from fifty-four countries over twenty years and methods addressing endogeneity, I find that fiscal decentralization is positively and significantly associated with social sector spending, and this association is amplified by greater female parliamentary representation. This moderating role is robust to alternative measures of the key variables, a broad range of political and institutional controls, and multiple estimation strategies, and is consistently stronger for health than for education expenditure. A staggered difference-in-differences design further shows that gender quotas adoption raises social sector spending, with effects emerging gradually and becoming significant five to eight years after implementation. Together, gender-inclusive governance conditions how fiscal decentralization shapes public expenditure composition toward social sectors.