Government assistance programs for internally displaced persons: assessing the impact on economic growth and labour market

Abstract

In this paper, we analyse the economic influence of expenditures on social protection of internally displaced persons (IDPs) trying to find a response to the research question: if social expenditures can be used in public administration as an effective tool for fostering economic growth and labour market development, or their only purpose is social support within the social responsibility of the government. Thus, we conduct our research using the case of Ukraine with its unprecedented scope of internal displacement caused by the war. To analyse the dependencies between social expenditures and economic growth we use the multiplier calculations. As a result, we found out that the expenditures on social protection of IDPs cause the growth of GDP with a ratio of at least 1:1,23. Besides, due to the indirect economic influence of social expenditures on consumer spending, it was possible to support no less than 13,7 thousand workplaces annually. To substantiate this impact, we used the authors’ method based on the evaluation of marginal propensity to consume and average cost to support workplaces (found as a dependency between consumer spending and employment). The proposed methodology can be useful for scientific analysis and justification of policy measures aimed at different social groups needing financial assistance from the government.