How Can Safety Nets Contribute to Economic Growth?

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 f...

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Bibliographic Details
Main Authors:	Alderman, Harold, Yemtsov, Ruslan
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	ACCESS TO INSURANCE ACCOUNTING AGRICULTURAL INSURANCE AGRICULTURAL PRODUCTIVITY ALLOCATIVE EFFICIENCY ASYMMETRIC INFORMATION ATTRITION BANK ACCOUNT BENEFICIARIES BENEFICIARY BENEFIT SYSTEM BLOCK GRANTS CAPACITY BUILDING CASH CROPS CASH ECONOMY CASH SUPPORT CASH TRANSFER CASH TRANSFER PROGRAMS CASH TRANSFERS CHILD BENEFIT CHILD GROWTH CHILD LABOR CHILD NUTRITION CHRONIC POVERTY COMMUNITY ASSETS CONDITIONAL CASH CONDITIONAL TRANSFER CONDITIONAL TRANSFERS CONFLICT CONSUMPTION SMOOTHING COST EFFECTIVENESS COVARIATE SHOCKS CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKETS DEVELOPMENT ECONOMICS DROUGHT ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMIC RECOVERY ECONOMIC SHOCK EMERGENCY FOOD EMPLOYMENT STATUS ENTREPRENEURSHIP EXPENDITURE EXPORTER EXTENDED FAMILIES EXTERNALITIES EXTREME POVERTY FARMERS FEE WAIVERS FINANCIAL CRISIS FINANCIAL MARKETS FIXED COSTS FLOW OF INFORMATION FOOD AID FOOD PROGRAM FOOD SECURITY FOOD SUBSIDIES FREE TRADE GENERAL EQUILIBRIUM GOVERNMENT EXPENDITURES GOVERNMENT POLICY GOVERNMENT SPENDING GRANTS TO SCHOOLS HEALTH CLINIC HEALTH PROGRAM HOUSEHOLD ALLOCATION HOUSEHOLD INCOME HUMAN CAPITAL HUMAN CAPITAL INVESTMENT HUMAN CAPITAL INVESTMENTS HUMAN DEVELOPMENT HUMAN RESOURCES INCOME INCOME DISTRIBUTION INCOME GAINS INCOME GROWTH INCOME SHOCKS INCOME SMOOTHING INCOME SUPPORT INCOME TRANSFER INCOMPLETE MARKETS INDICATOR TARGETING INEQUALITY INFORMATION ASYMMETRIES INFRASTRUCTURE INVESTMENT INSTITUTIONAL DEVELOPMENT INSTRUMENT INSURANCE INSURANCE MARKETS INTERNATIONAL BANK INTERNATIONAL FOOD POLICY IRRIGATION LABOR ALLOCATION LABOR DEMAND LABOR DISINCENTIVES LABOR FORCE LABOR FORCE PARTICIPATION LABOR INTENSIVE WORKS LABOR MARKET LABOR MARKET PROGRAMS LABOR SUPPLY LAND MANAGEMENT LEVY LIQUIDITY LIQUIDITY CONSTRAINTS LIVESTOCK OWNERSHIP LIVING STANDARDS LOCAL ECONOMIES LOCAL ECONOMY LOCAL FARMERS LOCAL INFRASTRUCTURE LOSS OF INCOME MALNUTRITION MARGINAL COSTS MARKET DEVELOPMENT MARKET ECONOMY MARKET FAILURES MICRO-ENTERPRISES MICRO-FINANCE MIGRATION MORAL HAZARD MOTIVATION NUTRITIONAL STATUS OLD AGE OLD AGE PENSION OPPORTUNITY COST OUTPUTS PENSIONS POLITICAL CONSTRAINTS POLITICAL ECONOMY POLITICAL PARTICIPATION POLITICAL SUPPORT POOR POOR AREAS POOR COUNTRIES POOR HOUSEHOLDS POVERTY ALLEVIATION POVERTY REDUCTION POVERTY TRAPS PRECAUTIONARY SAVINGS PREVENTATIVE HEALTH PRICE DISTORTIONS PRICE SUBSIDIES PRINCIPAL-AGENT PROBLEM PRODUCTIVE ASSETS PRODUCTIVITY PRODUCTIVITY GROWTH PROFITABILITY PROPENSITY TO SAVE PUBLIC ASSET PUBLIC ASSISTANCE PUBLIC POLICY PUBLIC RESOURCE PUBLIC TRANSFERS PUBLIC WORKS PUBLIC WORKS PROGRAMS RAINFALL INSURANCE REMITTANCES RESOURCE ALLOCATION RETURN RETURN ON INVESTMENT RETURNS RISK AVERSION RISK MANAGEMENT RISK REDUCTION RISK TAKING RURAL RURAL PUBLIC SAFETY SAFETY NET SAFETY NET PROGRAMS SAFETY NET TRANSFERS SAFETY NETS SAFETY ROPE SAFETY ROPES SAVINGS SCHOOL ATTENDANCE SCHOOL ENROLLMENT SCHOOL FEEDING SCHOOL FEEDING PROGRAMS SEARCH COSTS SERVICE PROVIDERS SHARE OF BENEFITS SOCIAL CAPITAL SOCIAL COHESION SOCIAL INSURANCE SOCIAL POLICIES SOCIAL POLICY SOCIAL PROGRAM SOCIAL PROGRAMS SOCIAL PROTECTION SOCIAL SAFETY NETS SOCIAL SECURITY SOCIAL TRANSFER SOCIAL TRANSFERS SUBSIDIZING TARGETED TRANSFERS TARGETING TAX TRADE REFORMS TRANSFER INCOME TRANSFER PROGRAM TRANSFER PROGRAMS TRANSFER RECIPIENTS UNEMPLOYED UNEMPLOYMENT UNEMPLOYMENT BENEFITS UNEMPLOYMENT INSURANCE VULNERABLE CHILDREN WAGES WATER AVAILABILITY WEATHER RISK WELFARE PROGRAMS WELFARE STATE WORK FORCE WORK INCENTIVES WORKFARE WORKS PROGRAM WORKS PROJECT
Online Access:	http://documents.worldbank.org/curated/en/2013/05/17680741/can-safety-nets-contribute-economic-growth http://hdl.handle.net/10986/15578

Description
Summary:	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.

How Can Safety Nets Contribute to Economic Growth?

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