05 August 2021

Fiscal Equity and Social Outcomes for Children

  “Strengthening the evidence on the correlation between fiscal equity and social outcomes for children” This report analyses the impact of equity in Government social spending, specifically, social protection spending, on absolute poverty and inequality, using a dataset from 101 countries. It also analyses how the distributional outcomes could be improved though changes in tax-benefit policies, using two country case studies. The findings reveal that equity in government social spending is a key determinant to ensure positive impact on well-being outcomes and is key to ensure that all segments of the society realize the right to social protection. The effectiveness of social protection spending in reducing extreme poverty (measured at $1.90 a day) and inequality (measured by Gini index) is positively associated with equity; specifically, with the share of overall social protection spending going to the poorest quintile. This finding augments the calls for a progressive and equitable universal social protection approach, where no one is left behind. Moreover, policy reforms targeted at increasing equity in the distribution of taxes and benefits across the population can be an efficient means of reducing child poverty in low- and middle-income countries.  This report illustrates that fiscal equity is critical to reaching the Sustainable Development Goals, and to the realization of universal and equitable access to social services.