Does democracy lead to more inclusive and equitable social contracts? Our answer is a qualified “yes.” Democratization in Latin America and Eastern Europe increased attention to social policy despite wrenching economic crises. Yet welfare legacies of the early and mid-twentieth century affected the new policy course. In Latin America, unequal entitlements eased political constraints on liberal reforms of existing social insurance systems and encouraged targeted assistance to the poor. Eastern Europe pursued a more solidaristic approach that avoided segmented assistance to the poor. But this approach also reproduced many inefficiencies and de facto rationing of the socialist period.