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Protect Incomes or Protect Jobs ? The Role of Social Policies in Post-Pandemic Recovery

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  • Demirgüç-Kunt,Asli
  • Lokshin,Michael M.
  • Torre,Ivan

Abstract

This paper examines the effectiveness of income protection and job protection policies for thepost-pandemic economic recovery of the second half of 2020 through 2021. The paper is based on a new data set of thebudgets of social protection programs implemented as a part of the pandemic stimulus package in 154 countries. Theempirical analysis shows that, in the short run, higher expenditure on job protection measures is associated withmore robust gross domestic product growth, increased employment, and decreased inactivity and poverty ratescompared to the expansion of income protection programs. Both policies had a significant economic impact only incountries with weaker pre-pandemic social insurance systems. In countries with broader coverage of the social insurancesystem, the income and job protection programs appear to have had a limited impact on post-pandemic recovery. Becausethe structural economic changes induced by the pandemic are expected to materialize fully in several years, moreresearch is needed to understand the longer-term effects of job protection and income protection policies on labormarkets and economic recovery.

Suggested Citation

  • Demirgüç-Kunt,Asli & Lokshin,Michael M. & Torre,Ivan, 2022. "Protect Incomes or Protect Jobs ? The Role of Social Policies in Post-Pandemic Recovery," Policy Research Working Paper Series 10166, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10166
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    Cited by:

    1. Michael Lokshin & Martin Ravallion & Iván Torre, 2022. "Is Social Protection a Luxury Good?," NBER Working Papers 30484, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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