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Is Social Protection a Luxury Good ?

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  • Lokshin,Michael M.
  • Ravallion,Martin
  • Torre,Ivan

Abstract

The claim that social protection is a luxury good—with a national income elasticity exceedingunity—has been influential. The paper tests the “luxury good hypothesis” using newly-assembled data on social protectionspending across countries since 1995, treating the pandemic period separately, as it entailed a large expansion insocial protection efforts. While the mean income share devoted to social protection rises with income, this isattributable to multiple confounders, including relative prices, weak governance in low-income countries and accessto information-communication technologies. Controlling for these, social protection is not a luxury good. This was alsotrue during the pandemic.

Suggested Citation

  • Lokshin,Michael M. & Ravallion,Martin & Torre,Ivan, 2022. "Is Social Protection a Luxury Good ?," Policy Research Working Paper Series 10174, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10174
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    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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