The Multiplier Effects of Government Expenditures on Social Protection: A Multi‐country Study

Dante Cardoso, Laura Carvalho, Gilberto Lima, Luiza Nassif‐Pires, Fernando Rugitsky and Marina Sanches

Development and Change, 2025, vol. 56, issue 1, 172-224

Abstract: This article uses a novel dataset comprising 42 countries for the years 1985–2020 to explore the relationship between public spending on social protection and GDP. The article contributes to the empirical literature on social protection spending by conducting a large multi‐country study using the structural vector autoregression approach. The results of the study highlight the positive effects of social protection expenditures on GDP that surpass those of total government expenditures. These results vary considerably across countries, with impact multipliers ranging from 5 in Mexico to ‐0.71 in Paraguay. The authors find that the cumulative multiplier exceeds 1 for most of the 42 sample countries, suggesting that the positive impact of social protection spending on GDP accumulates over time. The article finds statistically significant and strong correlations between the cumulative and impact multipliers and inequality measures such as the Gini coefficient and the income shares of the poorest and the richest. Indeed, the positive impact of public spending on social protection on GDP is especially pronounced in countries characterized by higher inequality. Taken together, the results have significant policy implications and suggest that the growth‐enhancing potential of social protection policies is complementary to the ability of such policies to reduce inequality.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/dech.12869

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:devchg:v:56:y:2025:i:1:p:172-224

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0012-155X

Access Statistics for this article

More articles in Development and Change from International Institute of Social Studies
Bibliographic data for series maintained by Wiley Content Delivery ().