A Rapid Review of Economic Policy and Social Protection Responses to Health and Economic Crises and Their Effects on Children: Lessons for the COVID-19 pandemic response

EXECUTIVE SUMMARY

Purpose

This rapid review seeks to inform initial and long-term public policy responses to the COVID-19 pandemic by assessing evidence on past economic policy and social protection responses to health and economic crises and their effects on children and families. The review focuses on virus outbreaks/ emergencies, economic crises and natural disasters which, similar to the COVID-19 pandemic, were rapid in onset, had wide-ranging geographical reach, and resulted in disruption of social services and economic sectors without affecting governance systems. Lessons are also drawn from the HIV/AIDS pandemic due to its impact on adult mortality rates and surviving children. The evidence provided by this review is intended for uptake by policy makers and academic researchers.

What were the economic policy and social protection responses to past crises?

Evidence shows that past health and economic crises had wide-ranging negative socio-economic impacts on child and family well-being, including on physical and mental health, schooling, poverty, food security, livelihood, infrastructure and social services. However, public policy responses to virus pandemics/outbreaks (apart from HIV/AIDS) were limited compared to policy responses to previous economic crises and natural disasters. The 2007–2008 global financial crisis provides useful insights as it included a short phase characterised by expansionary fiscal and social protection responses, followed by a longer phase of austerity measures. Expansionary responses were mainly predicated upon economic stimulus packages and pre-existing statutory social assistance (mostly cash transfers) and insurance programmes or plans, mostly in high- and middle-income countries. In sub-Saharan Africa, temporary social transfers and public works programmes were introduced, and in some countries, pre-existing school feeding programmes were scaled up. However, responses were constrained by weak social protection systems, low pre-existing coverage and decreased revenues. Some responses were gender blind/discriminatory as they favoured sectors dominated by men or excluded young men mostly affected by the recession-induced unemployment. Evidence also shows that one-off/emergency and pre-existing cash transfers have been a popular response to droughts and natural disasters such as tsunamis and earthquakes.

Economic policy and social protection responses to past crises: Primary and secondary effects on children

Evidence shows that during crises, economic stimulus responses reduce poverty and protect family income, while austerity measures have detrimental impacts on childcare, parental caregiving, adult mental health, home ownership, crime and the prevalence of infectious diseases. Social insurance programmes like health insurance safeguard health care utilization and weather insurance protects assets and agricultural production while unemployment benefits alleviate poverty, although there is the risk they can contribute to long-term unemployment. Most studies show that social assistance instruments, including cash transfers, have wide-reaching positive impacts on child and family outcomes such as school attendance, poverty reduction, food security, emotional well-being and family livelihoods during crises. Design elements like targeting, coverage, transfer value and duration/intensity mediate the impacts of social assistance schemes during crises. However, the impact of cash transfers on child nutritional status is mixed, similar to evidence from non-crisis contexts. In high income countries (HIC), active labor market programmes attenuate negative impacts on family poverty and unemployment, suicides, and mental health among adults and parents. In low- and middle-income countries (LMIC), public works programmes increase household incomes and reduce poverty. Social services reduce child mortality and increase education attainment.

Research implications

Overall, available evidence on the effects of economic policy and social protection responses is uneven across outcomes, regions, and the type of policy response because a large body of literature focuses on social assistance programmes. Future research on the COVID-19 pandemic can prioritize the voices of children and the marginalized and assess the effects of expansionary and austerity measures. It can also examine the role of several factors: social protection programme design and implementation; social care services; pre-existing macro-level demographic and health conditions and the diverse regional health and economic impacts of the pandemic.

Key lessons for public policy responses to the COVID-19 pandemic

Policy responses to past health and economic crises provide the following lessons for the COVID-19 pandemic response:

Economic stimulus and social protection responses must be child-sensitive and gender-responsive to achieve sustainable impacts on well-being.

• Pandemic planning has typically not addressed the needs of children; needs not institutionalized in social protection systems and which favour other demographics (especially in high income countries). The evidence shows that child-specific and age-sensitive fiscal and social protection policies can mitigate the longer term effects of crises and spur human capital development. In particular, social transfers and school-based measures (subsidies/meals) are effective in protecting children’s direct needs – health, nutrition, schooling – during past crises and mitigate the negative effects, not only in the short term but in the longer period (two+ years from response), although the majority of the available evidence is for LMIC. Gender inequality must also be addressed as it is often exacerbated during crises like the COVID-19 pandemic as women lose their jobs, gain additional care responsibilities, lack assets, and experience gender-based violence (secondary to social distancing health measures).

Governments can leverage pre-existing social protection infrastructure and expansionary stimulus packages to expand coverage and introduce new social protection programmes.

• Evidence shows that pre-existing statutory social protection programmes and reform processes enable a rapid social protection response during crises. Short-term responses often include the raising or top-up of benefit levels and the extension in duration of programmes or the introduction of new programmes. Long-term responses typically include permanent countercyclical reforms for social benefits, addressing sustainability and ensuring the transitioning of new programmes to permanence. However, the capacity to leverage preexisting social protection programmes varies across regions. For instance, LMIC are still in the process of building permanent/statutory programmes and rely on short-term/non-statutory social protection programmes. In LMIC, short-term emergency social protection responses to the COVID-19 pandemic can be extended into permanent programmes or be combined with transitions into permanent programmes.

Near-poor or newly poor informal workers and at-risk families and children must be included in the social protection response to avoid entrenching poverty among these groups.

• The evidence shows that social protection instruments with fixed targeting criteria (e.g., cash transfers) do not always account for the newly poor or at-risk populations and pre-existing programmes usually exclude informal workers and immigrants. Emerging evidence suggests that the COVID-19 pandemic has substantially increased the number of poor people, particularly in sub-Saharan Africa and some middle income countries (MIC), necessitating the need for social protection responses to cover newly poor and at-risk or near-poor families and children, including informal workers and immigrants. Public works programmes in LMIC and MIC are a good example of an instrument responsive to the nonpoor or newly poor due to their self-targeting approach.

Targeting of social protection responses should be effective and efficient and not add to the administrative burden.

• The evidence shows that in contexts where universal provision is not feasible, targeting the right vulnerable groups increases the effectiveness of social protection responses. However, poverty-targeting methods can increase costs and the administrative burden

There is a risk that expansionary fiscal and social protection responses to a severe crisis are followed by austerity policies detrimental to child well-being.

• The COVID-19 pandemic brings twin crises – health and economic – that will likely have long lasting economic effects in all countries, especially low income countries. Current economic stimulus and social protection responses to the COVID-19 pandemic are expansionary, but there is a high risk that financial austerity will be used to control budget deficits and consolidate debt, similarly to the global financial crisis experience.

Health systems must be strengthened during pandemics and severe shocks to ensure access to regular healthcare services by the general population and vulnerable groups (pregnant women, individuals with pre-existing medical conditions, young children).

• Evidence shows that investment in health services improves child health by reducing child mortality. Health measures for controlling outbreaks should be accompanied by social protection measures as the lack of social protection coverage perpetuates a vicious cycle of poverty and deprivation that diminishes health.

Building links between social protection and complementary interventions enables holistic responses to a pandemic/crisis with detrimental multi-generational impacts on adults, parents, children and the elderly.

• Lessons from the HIV/AIDS pandemic show that holistic HIV/AIDS programmes that integrate social protection with strong healthcare services, social work and child protection services can effectively address the multi-dimensional impact of illness and death on children in various situations, an approach that should be considered for COVID-19 responses, especially among socio-economically disadvantaged populations.