The Impact of Social Security on Household Welfare: Evidence from a Transition Country

Abstract

Although there is no doubt that social security can help poverty reduction, its effect on poverty reduction can vary for different situations. This article uses fixed effects regression to estimate the effect of social security transfers including contributory pensions and social allowances on the consumption expenditure of the receiving households in Vietnam. The article also investigates the effect of social security transfers on poverty in Vietnam. It is found that both pensions and social allowances increase expenditure of households, especially expenditure on nonfood consumption. Pensions and social allowances reduce poverty of both the recipients and the whole population.