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Social protection and growth

Briefing/policy papers

Written by Nicholas Mathers, Rachel Slater

‚ÄčThis briefing examines the evidence of the impacts of social protection on growth at macro (national), meso (community or local regional) and micro (individual or household) level and through direct and indirect channels.

Existing evidence suggests that social protection is an important policy tool for low and middle-income country governments, not just for alleviating poverty and reducing vulnerability but for promoting inclusive growth. Understanding and assessing the growth-enhancing impacts of social protection and identifying the most appropriate design and implementation features to achieve this should form part of policy and programme decisions.

Key messages

  • Evidence is overwhelming of the positive impacts of social protection on household productivity and labour market participation in developing countries. Social protection includes productive programmes and programmes primarily protecting consumption. Both types promote investment in and diversification of livelihoods and employment. They also improve future prospects through investment in better nutrition and access to health care and education.

  • In the face of shocks, such as natural disasters, rising food and fuel prices, ill health or the loss of employment, social protection plays an important role in limiting the need for negative coping strategies that can reduce growth, such as selling productive assets and removing children from school.

  • Social protection has positive impacts on growth at local level through the multiplier effects of increased local consumption and improving labour market outcomes. The impact of social protection on GDP is often insignificant in low and middle-income countries but likely to be positive if programmes are at scale.

  • Social protection is an effective tool that allows governments to bring about other economic reforms that have positive effects on economic growth, such as a reduction in inefficient commodity subsidies.

  • Substantial evidence shows that social protection in low and middle-income countries has no negative impacts on labour force participation or work effort and does not lead to dependency.
Nicholas Mathers and Rachel Slater