**3. Social Protection and Poverty Reduction around the World**<sup>**25**</sup>

Having argued that eliminating poverty, and addressing rising inequality and vulnerability will need to be a major part of the post-2015 development agenda, and that social protection is a key instrument to address these challenges, this section will set out the basic facts of social protection around the world. In particular, we will present quantitative estimates for the impact of social protection programs on poverty and inequality, which in turn depends on their efficiency and the adequacy of resources devoted to them. This factual account will then form the foundation for the next section, which presents potential international standards and targets for social protection as an instrument for achieving poverty reduction.

We acknowledge upfront that poverty reduction is not the sole objective of social protection programs. However, in the context of the post-2015 agenda we prefer to retain the focus on a single goal (poverty reduction) to assess social protection programs. We focus the presentation on the first set of current MDG1 goals formulated in terms of poverty at the international “dollar a day” line (more exactly $1.25 per day per capita in 2005 PPP). The purpose of this is to show that the proposed recast of goals can be operationalized with the data at hand. But as most readers would know, a poverty line is in many ways an arbitrary cut off. For many (richer) countries the dollar a day line does not represent a meaningful standard. We thus also use a relative cut off, set at the upper boundary of the bottom quintile of consumption (so that poverty headcount is fixed at 20 percent in any country). And alongside impacts on these poverty measures we also look at the impacts of social protection on inequality. In order not to divert the attention from the primary focus on extreme poverty and the potential for its elimination, we reduce discussion of other measures to a minimum; the interested reader can find corresponding data in the annexes. We return to the broader set of measures for social protection when we discuss policy implications in the conclusion to this paper.

There are different types of social protection programs depending on their objectives and the risks they cover. Classifications abound, and we follow the most widespread typology that is accepted for the developing world.<sup>26</sup> In what follows we include as social protection programs for social insurance (contributory programs, principally pensions), labor markets (for example job training), and noncontributory social assistance programs (or social safety nets) which include humanitarian and disaster relief programs, cash transfers, food stamps, school feeding, in-kind transfers, labor-intensive public works, targeted food assistance, subsidies and fee waivers. Social insurance and labor market programs tend to benefit higher income groups, whereas social assistance programs generally (but not exclusively) focus on the most poor and vulnerable.

The objectives of these various social protection programs and their scale vary from country to country. Run by governments, NGOs or donors, these programs are typically designed to protect vulnerable households and individuals, help the poor and promote employment, while increasing social cohesion and reducing inequality. Social protection programs address different needs of different groups; hence it is no surprise that many countries adopt different forms of social protection, but some components are almost universally accepted as part of the social protection architecture.

> 25 This section draws on a longer forthcoming paper, Fiszbein, Kanbur and Yemtsov (2013) 26

> See, for example, the World Bank’s new Social Protection and Labor Strategy, World Bank (2012b)

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