Does spending on social-welfare policies reduce poverty? An assessment of the European Union countries using impulse-response and efficiency methods

Abstrakt

Purpose – We answer two questions: (i) does the spending on social-welfare policies constitute a statistically-significant impulse for reducing poverty among various risk groups in the EU countries? And (ii) what is the level of efficiency of social spending when it comes to reducing various problems associated with poverty in the EU member states?


Research method – We use two research methods: Vector Error Correction Model (VECM) and extended Data Envelopment Analysis (DEA).


Results – We find that social-welfare policies in most of the EU countries create a sufficient impulse to reduce poverty among old aged people and survivors, families with children and the unemployed. However, the impulse is often not sufficient in the case of people with problems in meeting housing needs, as well as sick or disabled. What is more, the relative efficiency of social-welfare spending in some of the EU countries is low, what suggest that better outcomes may be achieved not only by increasing the spending, but also by improving the policies among current amount of funds. Surprisingly, the best-performing countries in reducing the poverty by social-welfare policies include, next to Denmark and Finland, also some Central and Eastern European countries: Czechia, Poland, Slovakia and Slovenia.


Originality / value – We extend the knowledge on the efficiency and effectiveness of government activities for the purpose of limiting poverty.

Bibliografia


  • Abosedra, S., Shahbaz, M. and Nawaz, K., 2016, Modeling causality between financial deepening and poverty reduction in Egypt, “Social Indicators Research”, Springer, 126(3), pp. 955–969.

  • Afonso, A. and Aubyn, M., 2005, Cross-country Efficiency of Secondary Education Provision. A Semi-parametric Analysis with Nondiscretionary Inputs, Working Paper Series, Frankfurt am Main.

  • Alvaredo, F. and Gasparini, L., 2015, Chapter 9 - Recent Trends in Inequality and Poverty in Developing Countries, in Atkinson, A. B. and Bourguignon, F. (eds) Handbook of Income Distribution, Elsevier (Handbook of Income Distribution), pp. 697–805. doi: https://doi.org/10.1016/B978-0-444-59428-0.00010-2.

  • Anderson, E. et al., 2017, Does government spending affect income inequality? A meta‐regression analysis, “Journal of Economic Surveys”, Wiley Online Library, 31(4), pp. 961–987.

  • Anderson, E. et al., 2018, Does government spending affect income poverty? A meta-regression analysis, “World Development”, Elsevier, 103, pp. 60–71.

  • Banker, R. D., Charnes, A. and Cooper, W. W., 1984, Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis, Management Science, 30(9), pp. 1078–1092.

  • Baran, J., Pietrzak, M. and Pietrzak, P., 2015, Efektywność funkcjonowania publicznych szkół wyższych, Optimum, Studia Ekonomiczne, 4(76), pp. 169–185.

  • Bausch, R. D., 2019, Social capital and the cyclicality of government expenditure, “International Journal of Trade and Global Markets”, Inderscience Publishers (IEL), 12(3–4), pp. 250–259.

  • Bourguignon, F., 2003, The growth elasticity of poverty reduction: explaining heterogeneity across countries and time periods, Inequality and growth: Theory and policy implications, Cambridge, MIT Press, 1(1).

  • Buracom, P., 2011, The determinants and distributional effects of public education, health, and welfare spending in Thailand, “Asian Affairs: An American Review”, Taylor & Francis, 38(3), pp. 113–142.

  • Caminada, K. and Goudswaard, K., 2009, Social expenditure and poverty reduction in the EU15 and other OECD countries, Department of Economics Research Memorandum.

  • Caminada, K. and Goudswaard, K., 2010, How well is social expenditure targeted to the poor?, Social Security, Poverty And Social Exclusion In Rich And Poorer Countries–International Studies On Social Security, 16, pp. 97–112.

  • Celikay, F. and Gumus, E., 2017, The effect of social spending on reducing poverty, “International Journal of Social Economics”, Emerald Publishing Limited.

  • Charemza, W. and Deadman, D. F., 1997, Nowa ekonometria. Polskie Wydawnictwo Ekonomiczne.

  • Cincera, M., Czarnitzki, D. and Thorwarth, S., 2009, Efficiency of Public Spending in Support of R&D Activities, Brussesl.

  • Clemente, J., Marcuello, C. and Montañes, A., 2012, Government Social Spending and GDP: has there been a change in social policy?, “Applied Economics”, Taylor & Francis, 44(22), pp. 2895–2905.

  • Cosmin, E., 2012, Social protection public expenditures and income inequality, “Ovidius University Annals, Economic Sciences Series”, XII, (2), pp. 1120–1125.

  • Cristóbal, J. et al., 2021, Unraveling the links between public spending and Sustainable Development Goals: Insights from data envelopment analysis, “Science of The Total Environment”, 786, p. 147459. doi: https://doi.org/10.1016/j.scitotenv.2021.147459.

  • Cullmann, A., Schmidt-Ehmcke, J. and Zloczysti, P., 2009, Innovation, R&D Efficiency and the Impact of the Regulatory Environment – A Two Stage Semi-Parametric DEA Approach, Berlin.

  • Cyrek, M., 2019, Government social spending in the EU countries: efficiency in poverty and income inequality reduction, “Equilibrium. Quarterly Journal of Economics and Economic Policy”, 14(3), pp. 405–424.

  • Daraio, C. and Simar, L., 2007, Advanced Robust and Nonparametric Methods in Efficiency Analysis: Methodology and Applications, New York: Springer.

  • Deroose, S. and Kastrop, C., 2008, The Quality of Public Finances: Findings of the EPC-Working Group: First Period 2004-2007, European Commission.

  • Domagała, A., 2009, Zastosowanie metody Data Envelopment Analysis do badania efektywności europejskich giełd papierów wartościowych (rozprawa doktorska), Poznań: Uniwersytet Ekonomiczny w Poznaniu.

  • Ferreira, F. and Ravallion, M., 2009, Poverty and inequality: The global context, “The Oxford Handbook of Economic Inequality”, Oxford: Oxford University Press.

  • Fiszbein, A., Kanbur, R. and Yemtsov, R., 2014, Social protection and poverty reduction: global patterns and some targets, “World Development”, Elsevier, 61, pp. 167–177.

  • Fosu, A. K., 2017, Growth, inequality, and poverty reduction in developing countries: Recent global evidence, “Research in Economics”, Elsevier, 71(2), pp. 306–336.

  • Garcés Ferrer, J. et al., 2014, Comparison of Social Spending and Tax Policy Before and After the Crisis: The Cases of Spain and Chile, “Global Studies Journal”, 6(2).

  • Garza-Rodriguez, J., 2018), Poverty and Economic Growth in Mexico, “Social Sciences”, doi: 10.3390/socsci7100183.

  • Di Gioacchino, D., Sabani, L. and Tedeschi, S., 2014, Preferences for social protection: Theory and empirics, “Economic Modelling”, Elsevier, 36, pp. 629–644.

  • Guzik, B., 2009, Podstawowe modele DEA w badaniu efektywności gospodarczej i społecznej, Poznań: Wydawnictwo Uniwersytetu w Poznaniu.

  • Haile, F. and Niño‐Zarazúa, M., 2018, Does Social Spending Improve Welfare in Low‐income and Middle‐income Countries?, “Journal of International Development”, Wiley Online Library, 30(3), pp. 367–398.

  • Helliwell, J., Layard, R. and Jeffrey, S., 2012, World Happiness Report, LSE Research Online Documents on Economics 47487, London School of Economics and Political Science, LSE Library.

  • Joumard, I., Pisu, M. and Bloch, D., 2012, Less income inequality and more growth–are they compatible? Part 3. Income redistribution via taxes and transfers across OECD countries, OECD.

  • Kharas, H. and McArthur, J., 2019, How much does the world spend on the Sustainable Development Goals?, Brookings.

  • Kiendrebeogo, Y., Assimaidou, K. and Tall, A., 2017, Social protection for poverty reduction in times of crisis, “Journal of Policy Modeling”, Elsevier, 39(6), pp. 1163–1183.

  • Kucharski, A., 2014, Metoda DEA w ocenie efektywności gospodarczej, Łódź: Uniwersytet Łódzki.

  • Kusideł, E., 1999), Modelowanie wektorowo-autoregresyjne VAR: metodologia i zastosowanie w badaniach ekonomicznych, Łódź: Wydawnictwo Absolwent.

  • Leventi, C., Sutherland, H. and Tasseva, I. V., 2019, Improving poverty reduction in Europe: What works best where?, “Journal of European Social Policy”, SAGE Publications Sage UK: London, England, 29(1), pp. 29–43.

  • Lustig, N., Pessino, C. and Scott, J., 2014, The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay: Introduction to the special issue, “Public Finance Review”, SAGE Publications Sage CA: Los Angeles, CA, 42(3), pp. 287–303.

  • Maddala, G. S., 2008, Ekonometria, Warszawa: Wydawnictwo Naukowe PWN.

  • Miežienė, R. and Krutulienė, S., 2019, The Impact of Social Transfers on Poverty Reduction in EU Countries, “Baltic Journal of European Studies”, 9, pp. 157–175. doi: 10.1515/bjes-2019-0009.

  • Mulok, D. et al., 2012, Is economic growth sufficient for poverty alleviation? Empirical evidence from Malaysia, “Cuadernos de economía”, Elsevier, 35(97), pp. 26–32.

  • Murray, S., 2020, The future of public spending: Why the way we spend is critical to the Sustainable Development Goals, The Economist Intelligence Unit.

  • Nazarko, J. et al., 2008, Metoda DEA w badaniu efektywności instytucji sektora publicznego na przykładzie szkół wyższych, „Badania Operacyjne i Decyzje”, 4, pp. 89–105.

  • Nindi, A. G. and Odhiambo, N. M., 2015, Poverty and Economic Growth in Swaziland: An Empirical Investigation, “Managing Global Transitions: International Research Journal”, 13(1).

  • Notten, G. and Guio, A.-C., 2019, The impact of social transfers on income poverty and material deprivation, in Decent Incomes for All. Improving Policies in Europe, Oxford University Press, pp. 85–107.

  • Nyasha, S., Gwenhure, Y. and Odhiambo, N. M., 2017, Poverty and economic growth in Ethiopia: a multivariate causal linkage, “The Journal of Developing Areas”, Tennessee State University College of Business, 51(1), pp. 343–359.

  • Odhiambo, N. M., 2009, Finance-growth-poverty nexus in South Africa: A dynamic causality linkage, “The Journal of Socio-Economics”, Elsevier, 38(2), pp. 320–325.

  • ONZ, 2019, Cel 1: Wyeliminować ubóstwo we wszystkich jego formach na całym świecie. Available at: https://www.un.org.pl/cel1, [8th October, 2021].

  • Ravallion, M., 2012, Why don’t we see poverty convergence?, “American Economic Review”, 102(1), pp. 504–523.

  • Ravallion, M. and Chen, S., 1997, What can new survey data tell us about recent changes in distribution and poverty?, “The World Bank Economic Review”, Oxford University Press, 11(2), pp. 357–382.

  • Rehman, I. U. and Shahbaz, M., 2014, Multivariate-based Granger causality between financial deepening and poverty: the case of Pakistan, “Quality & Quantity”, Springer, 48(6), pp. 3221–3241.

  • Savage, L., 2019, The politics of social spending after the great recession: The return of partisan policy making, “Governance”, Wiley Online Library, 32(1), pp. 123–141.

  • Sims, C. A., 1980, Macroeconomics and Reality, “Econometricam”, 48(1), pp. 1–48. doi: https://doi.org/10.2307/1912017.

  • Stevans, L. K. and Sessions, D. N., 2008, The Relationship Among Poverty, Economic Growth, and Inequality Revisited, “Journal of Income Distribution”, Ad libros publications inc., 17(1), pp. 5–20.

  • Tauchmann,H., 2012, Partial frontier efficiency analysis, “The Stata Journal”, 12, Number 3, pp. 461–478.

  • Vorisek, D. and Shu, Y., 2020, Understanding the Cost of Achieving the Sustainable Development Goals, Policy Research Workin Paper 9146.

  • Wilhelm, V. and Fiestas, I., 2005, Exploring the link between public spending and poverty reduction-lessons from the 90s, The World Bank.

  • World Bank, 2003, World Development Report 2004: Making services work for poor people, The World Bank.

Opublikowane
2022-04-06
Jak cytować
Dział
Studia i rozprawy