How Can Safety Nets Contribute to Economic Growth?

By H. Alderman, Ruslan G. Yemtsov. 2013

127 citations recorded by the source corpus.

The paper provides an up-to date and selective review of the literature on how social safety nets contribute to growth. The evidence is carefully chosen to show how safety nets have the potential to overcome constraints on growth linked to market failures, and is organized into 4 distinct pathways: i) encouraging asset accumulation by changing incentives and by addressing imperfections in financial markets caused by constraints in obtaining credit, and from information asymmetries; overcoming such failures helps households to invest into their human capital or productive assets; ii) failures in insurance markets especially in low income setting; safety nets are assisting in managing risk both ex post and ex ante; iii) safety nets are overcoming failure to create assets and other local economy complementary factors to household-level investments; iv) safety nets are shown to relax political constraints on policy. Safety nets have a dual objective of directly alleviating poverty through transfers to the poor and of triggering higher growth for the poor. However, the trade-off between the dual objectives of equity and growth is not eliminated by the potential for productive safety nets; this remains critical for designing social policies.

Subfields: Safety Research, Sociology and Political Science, Soil Science

View Paper: https://www.semanticscholar.org/paper/5121d52e6aa0daf7a5945b8ef495097efad0255b

Citations in the corpus

• Debunking the Stereotype of the Lazy Welfare Recipient (2015, unknown): “Bosch and Manacorda (2012), Grosh et al (2008), and Alderman and Yemtsov (2013), among others, have argued that the fact that targeting is less connected to current income suggests that taxes are low, and therefore, these programs are less likely to cause negative labor supply effects.”