Relationship between social protection expenditures and poverty

Poverty, which is also felt in European countries, the main continent of social welfare, is one of the main problems that need to be solved by states and international organizations that guide the world in this democratic century, where time and space are shrinking. In social welfare states located in continental Europe, which aim to ensure that their citizens can maintain an average standard of living, various policies are being implemented to eliminate or reduce poverty, which is also among the primary problems that need to be solved. The policies implemented in social welfare states are referred to as social policies in the literature. The most important instrument of social policies is social protection expenditures. The study examines the relationship between social protection expenditures and poverty in sixteen European countries, namely Austria, the Czech Republic, Finland, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, and the United Kingdom, which are social welfare states in Continental Europe. Statistical data on the share of social protection expenditures in GDP and the market income-based poverty rate for the fourteen-year period from 2008 to 2021, as reported by the OECD, were analyzed using the panel data method. To determine the direction and level of the relationship between social protection expenditures and poverty, the Granger and Dumitrescu-Hurlin tests, Common Co-Effects (CCEMG), and Extended Average Group (AMG) Co-Integration Coefficient Estimators were used in the analysis. The analysis revealed a positive reciprocal (two-way) causality between poverty and social protection expenditures in all countries except Slovakia, and a negative reciprocal (two-way) causality in Slovakia. In this context (excluding Slovakia), it was concluded that social protection expenditures and poverty generally cause each other's increase.