Kiel: Poverty Reduction, Equity and Growth Network (PEGNet), (Pegnet Policy Brief 7)
Social protection schemes help households manage risk and poverty, but they also encourage them to take new risks related to investment. Thereby, they promote pro-poor economic growth and stabilise society and polity.
However, only a minority of the world population has access to reliable social protection instruments. Most people rely on mutual support networks and informal protection mechanisms.
Tax-financed social protection schemes tend to be better able to reach out to poor and informal sector households.
And universal transfers are better able to contribute to economic and political development than targeted transfers.