SEMINAR: Does Social Protection Reduce Vulnerability to Poverty? Household Level Evidence from Pakistan

While many studies have investigated in different countries the impact of social protection (SP) on ex-post poverty, the impact on ex-ante vulnerability to poverty (VtP) has received far less attention. This paper contributes to the literature by investigating both types of impacts in Pakistan, focusing on household-specific shocks (idiosyncratic vulnerability) and community-specific shocks (covariate vulnerability). We use a hierarchical modelling approach to analyse data from the Multiple Indicator Cluster Survey (MICS-2011) on about 90,000 households in the Punjab province. Matching methods and simultaneous endogenous switching regression are used to control for potential selection bias and estimate average treatment effects. The results show that SP has significantly reduced household poverty and VtP. However, there are considerable differences in both types of impact when comparing households in different wealth-index quantiles (a measure of asset ownership). We find that SP as a whole benefits households in the lowest quintiles the most in terms of VtP reduction, but not as much in terms of poverty reduction. Our results provide reliable evidence that SP programmes do have an impact on both poverty and vulnerability reduction, in support of further SP funding