Study on the Impact Mechanism of Social Security Expenditure on the Economy of Low-Income Groups and Regional Macroeconomic Regulation Strategies

A Case Study of Anhui Province

Abstract

The total social security expenditure of Anhui Province has increased constantly, reaching 142.67 billion yuan in 2022. Nevertheless, a significant internal development gradient exists within the province. There are enormous differences in economic structure, employment patterns, and the demand for social security among Wan bei (northern Anhui), Wan zhong (central Anhui), and Wan nan (southern Anhui). Based on this, it is challenging to establish the same social security policy in Anhui that suits each section. Hence, this paper aims to establish the mechanism by which social security expenditure impacts the economy of low-income groups, providing statistics for the Anhui government to inform macroeconomic regulation in Wan bei, Wan zhong, and Wan nan. Existing research usually used traditional disposable income and poverty rate indicators to analyze the current status of the social security system, lacking in-depth analysis of expenditure structure and the compatibility of regional development characteristics. This paper introduces the poverty factor model, constructs a new survival-oriented consumption burden index, and establishes a Theil index for regional disparities to depict the cumulative effect of various policies; adopts the logarithm of regional gross domestic product to control the impact of economic scale; utilizes the information entropy model to quantify the uniformity of expenditure structure, constructing a dynamic time series model. Research indicates that the lack of medical expenditure in Wan bei results in an overreliance on the minimum living security system. There is a significant mismatch between the security of elderly care and employment security in Wan nan. In the Wan zhong, however, high housing costs are squeezing the improvement effect of social security, and structural imbalance has become a key bottleneck restricting the enhancement of social security efficiency. In terms of research on the impact mechanism, current analyses focus on the effect of directly reducing poverty, lacking discussions of judgment on multidimensional causes. Therefore, this paper chooses per capita disposable income and poverty incidence as outcome variables and consumption expenditure as a mediating variable, controls for regional development indicators such as the urbanization rate and non-agricultural employment rate, constructs a two-way fixed effects model to control for the interference of regional characteristics and time trends, and establishes a mediating effect model to identify the mechanism of action. Results show that social security expenditure not only increases disposable income through direct income transfer, but also through the indirect improvement effect stimulated by consumption. Among these, medical care and minimum living security expenditures play an obvious role in alleviating short-term poverty. In contrast, expenditures on employment support and elderly care have greater potential for long-term income growth. Scholars’ research related to regional macroeconomic regulation often overlooks the net effect of a policy and the differences between places. Based on the impact of the existing factor of the minimum living security standard increase policy in Wan bei, this paper controls for variables such as urbanization rate and fiscal self-sufficiency rate by identifying the net effect of policies through a multi-period DID model. This paper introduces the economic distance spatial weight matrix. It constructs a spatial Durbin model to capture inter-regional spillover effects, and while aiming to minimize the poverty rate, this paper constructs a non-linear programming model. Results reveal that the gap in inter-regional development conditions hinders the effectiveness of policies, and social security expenditure exhibits a spatial spillover effect. By allocating expenditures more efficiently toward areas such as medical care and elderly care, the poverty alleviation effect in vulnerable regions can be significantly improved. Based on the above research, this paper creatively proposes a three-dimensional regulation paradigm: structurally, establish a linkage mechanism between the expansion of the chronic disease reimbursement catalog and consumption-employment; in terms of regional adaptation, design agricultural income insurance for northern Anhui, occupational injury protection for southern Anhui, and gradient reduction of affordable housing rents for central Anhui; in terms of coordinated governance, promote the construction of the Yangtze River Delta medical insurance settlement sharing and dynamic monitoring platform. This model offers a viable plan for targeted regulation and high-quality development of social security within provinces.