France's départements spent an average of €913.4 per inhabitant in 2006, with social services amounting to a total of €27 billion accounting for nearly 50% of this spending.

Two periods can be distinguished within the general trend of social services expenditure between 1992 and 2006, namely a period of stability, from 1992 to 1999, during which there was no change in scope of the départements' powers with regard to "social services provision" not any transfer of powers; this was followed by a more unstable period, from 2000 to 2006, during which the scope of the départements' powers with regard to the provision of social services underwent considerable change.

The descriptive analysis also reveals sizeable disparities between départements in per capita expenditure on social services. However, these observed disparities are largely attributable to the normally expected determinants of social services expenditure, e.g. the relative proportions of elderly and young people in the total population, number of beneficiaries of the revenu minimum d'insertion (RMI- minimum integration income), etc., and thus appear very closely correlated with départements' socio-demographic and economic characteristics. This is clearly confirmed by econometric analysis, since the estimated expenditure equation explains 84% of the variance in social services expenditure by the départements.

The residual portion of the variance in expenditure, i.e. the portion not explained by identified determinants, can be interpreted as reflecting a discretionary component of a département's social services expenditure. Yet this appears to be distributed not in a random fashion across France, but on the contrary in a "regionalised" manner. This can be interpreted as the fact that neighbouring départements resemble each other more than those further apart. This "regionalisation" (with neighbouring départements implicitly forming "regions" with similar characteristics) qualifies the notion that the départements' social services expenditures are not entirely pre-determined.

Trésor-Economics No. 48