Who spends more to combat COVID‐19 social risks and why?

Abstract

COVID‐19 has gone beyond a public health crisis and poses a serious threat to people's livelihoods. In response to the growing employment and income crisis, most OECD countries have introduced various policies and programs to alleviate rapidly rising social risks and stabilise people's livelihoods. However, these measures vary, with some governments spending only 1% of GDP in 2020, while others spent more than 10%. We conducted a multiple regression analysis to examine factors associated with the level of additional social spending in 31 OECD countries. The results indicate that lower generosity of unemployment benefits was associated with additional social policy spending. However, contrary to the hypothesis, higher additional spending was found among countries with higher levels of government debt. We ended with policy recommendations.

Emergency welfare states in action: Social policy adaptations to COVID‐19 in the Czechia, Hungary and Slovakia

“…According to the compensation hypothesis, when social risks are increasing, public demand for welfare programmes increases. Crises make partisan and electoral politics more attentive to public demands (Noh et al, 2022).…”

“…However, even under the circumstances of exogenous shocks, in the long run, public policy is rooted in economic preconditions. Therefore, institutions and policies work within a framework in which the economy places certain limits (Noh et al, 2022). In particular, fiscal space in government spending matters, so lower government debts enable governments to allocate more funding to social expenditure to compensate for the social impacts of the pandemic.…”