Essays On Social Safety Nets
Author: Muhammad Mujahid Iqbal

The underlying dissertation aims to conduct three research essays on covariate shocks and social protection. The first essay explores the relationship between occurrence of covariate shocks at tehsil level and households’ well-being by using HIES (2018-19). The well-being is measured by indicators, such as log of per-adult equivalent, log of monthly income, log of calorie intakes, and log of food and non-food expenditure share to the total expenditures, whereas covariate shocks are measured by rainfall and temperature, and flood shocks. By and large, the estimated results demonstrate that covariate shocks reveal adverse impacts on the household’s well-being outcomes. Likewise, the application of binary Logit Model also suggests that flood and climatic shocks have adverse impacts on determining the poverty and food insecurity status of the households. We have applied Generalized Ordered Logit (GOL) model on five ordered quantiles of the expenditures, monthly income, and calories intake by households to quantify the variations in the magnitude of the co-efficient. The results establish that covariate shocks are more hurting the lower quantiles, as compared to the higher quantiles of the expenditures, income, and calorie intakes. These findings establish two implications: i) on the whole, all households are exposed to the climatic shocks, while the magnitudes of influences vary with respect to resilience capacity of the households, and ii) especially, households belonging to poorest quintiles are more exposed to the covariate shocks than the richer income quintiles. So, effective and inclusive social safety nets, which are directly designed for cushioning against the covariate shocks are required to be implemented. For that purpose, the mechanism of the BISP needs to expand for those who are extremely vulnerable to the flood and climatic shocks. The second research essay evaluates the mediating role of social protection expenditures on achieving well-being agenda against the economic and climatic shocks in developing countries at macro-level. The study has employed three indicators of well-being i.e., food insecurity, national level household expenditures, and accumulation of human asset. For empirical purpose, we use the unbalanced panel data of 94 developing countries. The selection of the countries is based on the availability of data (2001-2019) on economic and environmental vulnerability. For empirical purpose, the underlying study has applied the country fixed effect model. The estimated results suggest that the social protection expenditures have the significant mediating role against the economic and environmental shocks in order to maintain the national level food security, increase in household expenditures as well as escalation in human asset accumulation in developing countries. The study also highlights that social protection expenditures have much stronger mediating role against environmental shocks as compared to macro-economic vulnerabilities. The results of this essay suggest a strong policy implication, and these can motivate the policymakers as well as the governments of the developing countries to increase the expenditures on social protection programs. Primarily, these findings substantiate the significance of the first essay. The moderating role of the cash transfer programs are expected to be increasing as the governments enhance their budgetary allocation on implementation of the social protection programs. After establishing the adverse impacts of covariate shocks on households’ well-being, and the mediating role of social protection programs against economic and environmental vulnerabilities, it comes out that there is a certain need to design a shock adjusted policy framework. As Pakistan being the highly vulnerable country to the economic and environmental shocks, the role of BISP cash transfer becomes highly important. The current targeting method of BISP is highly depending on the formulation of PMT score, it is static in nature, as it is not capturing the impacts of covariate shocks. So, third essay primarily focuses on the shock adjusted targeting method for BISP. This analysis is chiefly based on Household Integrated Expenditure Survey (HIES) 2018-19 conducted by Pakistan Bureau of Statistics. The sample consists of 24,809 households from four provinces (Punjab, KPK, Sindh, and Balochistan). From HIES, we have estimated the PMT score without shocks, while other socioeconomic profile of households is also measured from said household survey. The data of tehsil level flood water covering area (square kilometer) is collected from NASA MODIS Satellite data. While, the tehsil level climatic data of rainfall and temperature is taken from European Center for Medium-Range Weather Forecasts (ECMWF). In order to merge it with tehsil’s information, we acquired the code classification of tehsils of HIES 2018-19 from PBS. After identification of tehsils from HIES household survey data, we merged all flood and climatic variables by using tehsil codes as their key identifiers. After this, we estimated shock adjusted PMT score after merging covariate shocks data with HIES data. Overall targeting performance of shock adjusted model increased to 67 percent as compared to 60 percent targeting performance of without shock model. Coverage of bottom 20 percent from urban areas decreased to 42 percent as compared to 55 percent previously. Urban areas were given over coverage in previous model adopted by BISP based on HIES 2013-14. This motivated us to suggest policymakers to adopt shock adjusted targeting method because it is not only dynamic in nature but it also captures dynamic nature of poverty in Pakistan. By summing up the above-mentioned three research essays, the findings establish policy implications as follows: Government should design social safety nets according to the climatic and environmental shocks. As BISP is one of the largest social protection programs, it must be extended to the flood-prone disasters, and climatic-shocks. Specifically, policymakers must prioritize the lower quantile to enable them to cushion the adverse impacts of the climatic and flood-prone disasters. Flood disaster appears to be the highly disastrous calamity, government must link the social safety nets with National Disaster Management Authority (NDMA), so that vulnerable households may target earlier, and rescue them from being food insecure and from chronic poverty. BISP administration should revisit the formula of PMT score to target the people. The new PMT should be shock adjusted, such as climatic and flood-prone hazards. The adjusted formula may be helpful to identify the highly exposed households. Supervisor:- Dr. Nasir Iqbal Co-Supervisor:- Dr. Saima Nawaz

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Supervisor: Nasir Iqbal
Cosupervisor: Saima Nawaz

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