Assessing the Efficiency and Total Factor Productivity of Social Protection Expenditure: A Study of CEE Countries

Reducing poverty and income inequality is a major objective of contemporary social policy. Considerable financial resources are spent on social protection to support this purpose. Since these resources are limited, their efficient use is important for improving poverty and income inequality outcomes. The aim of this study is to assess the efficiency and productivity of social protection expenditure in eleven Central and Eastern European (CEE) EU Member States through Data Envelopment Analysis (DEA) and the Malmquist Productivity Index (MPI). Three input-oriented DEA models are estimated for 2016–2023, including two poverty-oriented models and one income-distribution-oriented model. The results indicate high efficiency and scale efficiency across countries, but favourable results in both poverty-oriented models are not necessarily accompanied by similar results in the income-distribution-oriented model. MPI decomposition shows that productivity dynamics in the poverty-oriented models reflect mainly technical efficiency changes before the COVID-19 pandemic and technological change thereafter, whereas productivity dynamics in the income-distribution-oriented model reflect mainly technical efficiency changes throughout the period.