The Macroeconomic Impacts of Expanding Social Benefit Programs: Evidence from Post-Soviet Economies

Aya-Marihane Benmecheri — Wed, 22 Jul 2026 00:00:00 -0500

Since the early 1990s, the expansion of social benefit programs has been one of the principal policy instruments used to address poverty, inequality, and social instability in post-Soviet economies. However, the macroeconomy effects of these programs are still the subject of considerable debate, with scholars divided over whether the expansion of welfare promotes inclusive growth or undermines fiscal sustainability. This paper empirically examines the economic effects of the expansion of social benefits in selected Post-Soviet countries in the period from 2000 to 2023. Using panel data from the World Bank, the International Monetary Fund (IMF), and national statistical agencies, the study employs fixed-effects and dynamic generalized method of moments (GMM) estimations to evaluate the impact of social spending on GDP growth, unemployment, inflation, and income inequality. The results suggest that a moderate and targeted expansion of social benefits can promote economic growth, support job creation, and reduce income inequality. On the contrary, excessively high levels of spending—particularly when financed through budgets deficit—are associated with rising inflation and increased fiscal pressures. According to these findings, the role of social benefits in society depends on factors such as the structure of the welfare system, targeting efficiency, and fiscal discipline. This article bridges the existing literature by providing new comparative evidence from transitional economies and highlighting the importance of balanced welfare development that promotes economic efficiency and social cohesion.

Tiempo y economía

The Macroeconomic Impacts of Expanding Social Benefit Programs: Evidence from Post-Soviet Economies