A terrific analysis of fiscal responses to the pandemic is just out! Led by Hill and Friedman, the 2022 edition of the flagship Poverty and Shared Prosperity report is a goldmine of quantitative analysis on the Covid response as well as thoughtful reflections on future directions. My main takeaways: global poverty increased by 71-89 million people during the pandemic, but fiscal responses (for households and firms) mitigated the effects significantly – tho much more effectively in higher income countries (see p.136). Almost 3 months passed between lockdowns announcements and initial support was received. Such relatively slow responsiveness has structural roots: this includes, for example, the level of formalization (which affected the ability to use instruments like wage subsidies), but also the overall configuration of tax-transfer systems. Out of 94 countries, in 2/3 the income of poorest decile “falls by the time taxes have been paid and transfers and subsidies have been received”. In fact, poorer countries provide less transfers, collect less taxes and those that are collected are the least progressive (64% of taxes are indirect). Furthermore, countries with better access to financing (i.e., with higher sovereign credit rating) achieved a larger fiscal response. Did the response “stick”? In some cases, premature withdrawal of support may be reflected in recent response to inflation, which – as I discussed a couple of weeks ago – involves an array of new programs and large subsidies. Paraphrasing a prominent economist, we know so much, but when do we learn?
And here is another spectacular piece: a comprehensive review by Banerjee elegantly lays out social protection issues, design tradeoffs, implementation quandaries, and empirical gaps. Focused on low- and middle-income countries, the paper offers an analytical framework for thinking about some of the hottest debates, like the selection of beneficiaries, that affect assistance and insurance schemes. These are not independent choices, which in fact “… operate together to create a unified social protection system” (h/t Julian Koschorke).
Eager for a regional deep dive? A report led by Lokshin and Torre zooms into social protection issues in the ECA region. See for instance table 2.1, p.47 for a nice overview of pre- and post-pandemic spending, as well as box 2.2, p.55-56 on pandemic responses. Among the findings, and somewhat consistently with the role of informality in shaping responses mentioned earlier, countries that “… spent larger shares of their social protection response budget on job protection measures (as opposed to income protection) observed smaller decreases in employment and smaller increases in inactivity and poverty”.
From policy to implementation, with a flurry of resources on digital cash transfers. Blogging on a new G2Px report on the theme, Qiang et al argued that the embracement of digital transfers during the pandemic represented “a unique opportunity for progress”. At country level, a paper by Hosny and Sollaci found that implementing digital payments could have cushioned the Covid-19 income shock in Vietnam, especially among the urban middle-class. But what is the lived experience at local level? Fieldwork from Indonesia offers qualitative evidence on the pros and cons of digital cash as expressed by local actors and communities (see table 5).
More on delivery matters: how can social protection programs be adapted for displaced population? Lowe et al enrich the growing research from Cameroon, Colombia, and Greece by assessing if and how some key functions were adjusted. This includes activities like “outreach and communication” (no much adjustment), “intake, registration and assessment” (no real adaptation); “determination and notification of eligibility” (more mixed, with positive examples form Cameroon and Colombia); and “provision of benefits or services”, which was “… not necessarily worse than that of host populations”; and “accountability, management and monitoring”, which wasn’t used much.
Moving to Africa, a paper by Tondini investigates the short and longer-terms effect of the South African Child Support Grant on mothers’ labor market outcomes. The article shows that the program increased the probability of being active and looking for a job in the short term; but 5 years later, mothers who benefited for one year are as likely to be employed as those who never received it. In other words, “the grant appears to facilitate job search for single mothers in the presence of high search costs, but does not significantly change job prospects” (h/t Amber Peterman).
Recommendations on providing some form of targeted cash transfers is mushrooming across themes. For example, what could be done to curb inflation in Iran? “[T]he poorer segments of the population could be compensated directly through better targeting the existing cash transfers”, according to a new IMF working paper by Ture and Khazaei. And what about mitigating the effects of climate change in Small Island States? Cevik’s suggestion is to provide “… compensatory policies designed to recycle additional revenue through lowering other taxes and increasing targeted cash transfers and public investment can alleviate adverse effects on disposable household income”.
Final question: guess what’s are among the most researched themes across 15 humanitarian lessons-learned papers since 2003? Yes of course, cash transfers, as Alexander and Kerkvliet show in their ALNAP “lessons from lessons” review.
Ugo Gentilini is from the World Bank’s Social Protection & Jobs global practice. The Social Protection Links newsletter, issued every Friday, distills and discusses a selection of curated resources on the topic, from academic articles to podcasts. The blog is republished on socialprotection.org each week, offering knowledge on social protection to help you stay on top of it — succinctly, regularly and frequently. Previous editions can be found here.