Working Paper: NBER ID: w24665
Authors: Martin Ravallion; Dean Jolliffe; Juan Margitic
Abstract: Standard measures of poverty may reveal nothing about whether the poorest of the poor are being lifted-up or left-behind, yet this is a widespread concern among policy makers and citizens. The paper assesses whether public spending on social protection benefits the poorest and hence lifts the floor, and what role economic development plays. Evidence is presented for the developing world and the US. Across developing countries, a higher mean income comes with a higher floor. The bulk of this income effect is direct rather than via higher spending on social protection. That spending generally lifts the floor though this is mainly due to social insurance; on average, social assistance adds only 1.5 cents per day to the floor. Turning to the US, the paper finds that the floor has been sinking over the last 30 years, associated with an inequitable growth process. Food stamp spending partially compensates the poorest, and helped stabilize the floor in the wake of the 2008 financial crisis. The poorest in the US gain more from food stamps than average spending on food stamps, though the program’s impact on the floor per $ spent has fallen over time.
Keywords: social protection; economic development; poverty; food stamps; public spending
JEL Codes: I32; I38; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social assistance (I38) | economic floor for the poorest (I32) |
| food stamp spending (H53) | economic floor for the poorest (I32) |
| inequitable growth processes (I14) | economic floor for the poorest (I32) |
| public spending on social protection (H55) | economic floor for the poorest (I32) |
| economic development (O29) | economic floor for the poorest (I32) |
| higher public spending on social protection (H55) | gains for the poorest (I32) |
| higher mean income (D31) | economic floor for the poorest (I32) |