Impact of Equity in Social Protection Spending on Income Poverty and Inequality

Abstract

This study aims to investigate whether higher equity in government social protection spending strongly predicts positive changes in income poverty and inequality. Our approach was to regress the measures of absolute poverty and inequality on the indicators of equity in social protection spending at the country level, controlling for the level of spending and the country wealth measured by per capita GDP. For that purpose, we have compiled a dataset of 535 observations from 101 countries over years 1998–2017, including 199 observations for 70 low- and middle-income countries from Europe, Asia, North and South America, and Africa. Our findings support the proposition that equity in social spending (measured by the share of social protection spending going to the bottom quintile) is a significant and strong predictor of improved distributional outcomes (poverty measured at Int$1.90 a day and inequality measured by the Gini index). Moreover, in low- and middle-income countries in our sample the poverty and inequality reducing impact of this equity measure is stronger than in the sample including all countries. The presence of a significant gap in equity of social protection spending between the high-income countries and the rest of countries included in the study signifies that there is a large potential in improving equity in social protection spending in low- and middle-income countries. Social protection reforms in these countries should be focused on extending the coverage of social protection programs and improving access to social protection for the poorest segments of the population.

Assessing the Drivers of Sustained Agricultural Economic Development in China: Agricultural Productivity and Poverty Reduction Efficiency

“…Conversely, if economic growth is accompanied by worsening income inequality, poverty may increase rather than decrease. Because of this obvious negative effect of income disparity on poverty reduction, relevant scholars have also conducted a lot of research on the effect of factors such as distribution structure, transfer payments, and fiscal allocation on poverty reduction [13][14][15].…”

Measurement of Productivity of Local Government Spending in Poverty Alleviation

“…Likewise with infrastructure services, [8] revealed that government spending in the infrastructure sector will accelerate the flow of goods and services and reduce production costs and make it easier for people to access services to other economic sectors and this has an impact on reducing poverty levels. [9] states that social protection spending has an impact on reducing poverty, especially in low-and middle-income countries. This finding is also supported by research from [10]; [11] and [12] which depict that government spending on the social protection sector directly improves the quality of life of the poor.…”