Saturday, October 27, 2018

Social protection: a lever to reduce poverty and inequality

The number of people living in extreme poverty—767 million in 2013—would be between 136 million and 165 million higher without social protection transfers (Fiszbein, Kanbur and Yemtsov, 2014). Insofar as social protection helps men and women manage trade-offs between immediate needs and future livelihoods, it supports capital accumulation and investment. When promoting children’s access to health care and school enrolment and attendance, social protection programmes can also help break the vicious cycle of intergenerational poverty.

Social protection not only alleviates poverty. It also promotes the well-being of societies at large. Evidence from across the globe shows that social protection transfers can stimulate demand and boost consumption, thereby promoting economic growth. During economic downturns, for instance, spending on social protection can revive economies and stimulate employment.

Social protection also reduces income inequality. Tax-financed social assistance programmes alone have brought the Gini coefficient (used to measure income inequality) down by more than 10 per cent in countries including Mauritius and Mongolia.3 Contributory social insurance programmes have an even greater equalizing effect in middle- and high-income countries, where coverage is more widespread. In countries of Central Asia and Eastern Europe, for instance, the Gini coefficient is almost 16 per cent lower than it would be in the absence of social insurance schemes.

In developing countries, cash and in-kind transfers have helped increase school enrolment and attendance. They have also improved the health and nutritional status of people in beneficiary households. Health care and other programmes that reduce income insecurity among adults, including unemployment protection, disability benefits and social pensions, have a strong intergenerational impact. Chapter IV discusses the effects of old-age pensions on children’s well-being.

The report calls for more research on the long-term impacts of social protection schemes, including on the dynamics of poverty. Research suggests that temporary cash transfers alone are insufficient to help people permanently escape poverty. It also shows that the positive effects of social protection on poverty can easily be undone by regressive tax systems.

Nearly everyone is at risk of falling into poverty at some point in their lives. The report argues for social protection systems that protect all members of society throughout the life cycle—and that address the risk of poverty, rather than poverty itself. It also makes the case for broad policy efforts, beyond social protection, to promote income redistribution and tackle the root causes of poverty.

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