The Association between Social Protection Development and Income Inequality: Evidence from Asia and the Pacific

This study investigates the association between social protection (SP) development, proxied by the Social Protection Indicator, and income inequality using panel data from Asia and the Pacific. The empirical results show that the development of each SP program is associated differently with income inequality across countries categorized by income level. In low- and lower-middle-income countries, all SP programs (social insurance, social assistance, and labor market programs) are negatively associated with income inequality. Meanwhile, in upper-middle- and high-income countries, only the social insurance program is significantly negatively correlated with income inequality. Based on the findings, we discuss policy implications for expanding SP coverage to support income inequality reduction in Asia and the Pacific.