Short Abstract:

The paper analyses the role of social protection in reducing multidimensional poverty at the cross-country level. We use a novel database of multidimensional poverty covering many countries and years; we also collect and harmonize data on social protection expenditures and other relevant variables. We look at trends and then estimate the effects of social protection on multidimensional poverty.

Long Abstract:

The reduction, and ultimately the elimination, of multidimensional poverty is one of the fundamental development objectives, as represented by SDG1. Compared to income poverty, the reduction of multidimensional poverty is not just related to increasing incomes, but also to improve people’s capabilities. In order to achieve such goal, governments can use different policies. One of them is social protection, which aims at reducing poverty and vulnerability. Its use has increased significantly especially in lower income countries in the last two decades and it played a central role in the Covid-19 context.

Current evidence from program evaluations shows that social protection, and especially social assistance, have been successful in meeting its poverty reduction goals most of the time. In addition, cross-country studies from national household surveys have shown that expenditures and benefits incidence (coverage) in social protection decreased poverty.

What is missing is evidence in relation to multidimensional poverty. This is crucial for several reasons. First, it is clear that policies and strategies that affect income poverty, not necessarily have the same impact on non-monetary dimensions of poverty. Indeed, recent research shows that economic growth reduces income poverty five eight times more than multidimensional poverty. Second, multidimensional poverty is likely to be affected by expenditures on social protection but also other relevant sectors (such as health and education). Third, in times of uncertainty and crisis, it is important to understand how to maximize multidimensional poverty reduction – and thus, achieve SDG 1 of the 2030 Agenda - in light of potential budget restrictions and low fiscal space.

To fill this gap, we explore the role of social protection in multidimensional poverty reduction in the last three decades. And we also analyze the role of expenditures in other sectors. Taking advantage of the time dimension of our data, we also focus and explore the role of social protection for multidimensional poverty in times and/or situations of crises.

We use a novel database of multidimensional poverty covering many countries and years. Our multidimensional poverty index has the advantage of being at the individual level rather than the household one. Compared to existing databases, we also cover a wider range of low- and middle-income countries and a longer time span. In parallel to our database on multidimensional poverty, we collect and harmonize data from different sources on social protection expenditures as well as other government expenditures and other relevant variables.

We first look at trends in multidimensional poverty and social protection expenditures, using our novel data; in particular we explore if there are regional heterogeneities and multidimensional poverty and social protection expenditures evolve with economic development.

We then estimate in a regression framework the effects of social protection on multidimensional poverty. We also plan to focus on the different dimensions of our index (health, education and employment), as well as on different groups (e.g., urban and rural people, men and women).

In this way, we explore the potential of social protection for multidimensional poverty also in times of crises and propose implications for social protection funding. This could also shed light on how to integrate social protection expenditures/budget with budgets for other ministries/sectors; this could improve institutionalization of social protection programs in the long term and less reliant on budget from international organizations. This can also inform how to move forward towards nationally chosen and locally appropriate social protection systems within a holistic social policy framework.

Keywords: social protection, multidimensional poverty, poverty measurement, econometric analysis, social expenditures.