Social Investment Impact on Poverty: Empirical Evidence of the Stock, Flow and Buffer Policy Functions in Germany

Abstract

This article examines whether social investment (SI) stock (education), flow (family support), and buffer (safety net) policy functions reduce poverty risk across age groups and family types. To contribute to the discussion on SI’s capability to promote the livelihoods of the vulnerable groups in society, this research focuses on the poverty risk of young adults and single mothers in the twenty-first-century Germany. Logistic regression analysis with longitudinal German Socio-Economic Panel (G-SOEP) micro data matched with various policy indicators shows that the policy functions reduce poverty risk among working age men and women more than disadvantaged young adults. The results demonstrate that flow and stock functions reinforce each other’s poverty-alleviating impact if social protection buffers are weak, more so among young women than men. Further, all SI policy functions are found to alleviate the high poverty risk of single mothers, but poverty-reducing policy complementarities take place only if family support is strong.