Economic growth or social expenditure: what is more effective in decreasing poverty and income inequality in the EU - a panel VAR approach

PurposeFirstly, the authors aimed at offering a general perspective on poverty, highlighting important directions of thinking from the theoretical development, including poverty's main causes (like education, health, social protection, economic growth, employment and good governance). Secondly, it was investigated the problem of poverty in Romania after its accession to the European Union (EU), aiming to show (1) Romania's position among the EU member states, nearby (2) the direct and indirect effects of the selected factors particularly in this country.Design/methodology/approachBased on data from Eurostat and Global Competitiveness Index (GCI), descriptive and path analyses were performed for the period between 2007 and 2020.FindingsThe main results emphasized (1) the critical position of Romania among the EU member states in 2020 and the progress recorded since 2007, nearby (2) the direct and indirect effects of the selected factors on poverty in this country. The study highlighted the limited chances for the full participation of the poor people of Romania in the progress of the entire society, especially in terms of education and economic growth.Originality/valueThe major contribution of this study is that it assumes to investigate a profound and persistent societal phenomenon in Romania that is not sufficiently analyzed, discussed and understood. Consequently, this study attained its main objective of showing that the main traditional socio-economic causes of poverty are still pertinent in the actual Romanian society.

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The Path to Poverty Reduction: How Do Economic Growth and Fiscal Policy Influence Poverty Through Inequality in Indonesia?

Agussalim,

Nursini,

Suhab

et al. 2024

Economies

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One of the factors impeding the decline in poverty in Indonesia is the government’s lack of attention to the need to reduce income inequality. Fiscal policy and economic growth can effectively reduce poverty by lowering income inequality, so the inequality channel must be considered. Socioeconomic and infrastructure differences between provinces can influence the effectiveness of economic growth and fiscal policy in reducing poverty. This study aimed to assess the effects of economic growth and fiscal policy regarding spending and taxes on direct and indirect poverty reduction through lowering income inequality, as well as considering how these variables influence poverty by province. This study employed secondary data, including panel data for 2010–2023 from 34 provinces in Indonesia, which were analyzed using autoregressive cross-lagged SEM. This study found that economic growth and fiscal policy regarding spending on education and health are statistically significant in directly reducing poverty in regions outside Java but do not affect it through income inequality. Taxes increase income inequality, and the social safety net does not reduce poverty outside Java. The increased spending on education and health should continue, but improvements are needed in terms of targeting social safety nets and tax reforms to strengthen the system and reduce inequality.

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Economic growth or social expenditure: what is more effective in decreasing poverty and income inequality in the EU - a panel VAR approach

Cited by 3 publications

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Impact of social protection policies on inclusive growth in Sub-Saharan Africa: evidence from bias-corrected dynamic panel

Impact of social protection policies on inclusive growth in Sub-Saharan Africa: evidence from bias-corrected dynamic panel

Are the traditional socio-economic causes of poverty still pertinent nowadays? Evidence from Romania within the European Union context

The Path to Poverty Reduction: How Do Economic Growth and Fiscal Policy Influence Poverty Through Inequality in Indonesia?

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