The Impact of Social Security Expenditures on Convergence of Social Welfare in Provinces of Iran

This study aimed to investigate the effect of social security expenditure on the convergence of social welfare in provinces of Iran. Results of estimating models, using Spatial Econometrics, revealed that social security expenditure has a positive and significant effect on the convergence of social welfare in provinces of Iran during the period 2006-2020. Moreover, findings demonstrated that direct and indirect effect of social security expenditure is also positive, in the sense that the increases in social security expenditure has not only improved the convergence of social welfare in all provinces, but its spillover effects have also improved the convergence of social welfare in neighboring provinces on average. Besides, the Absolute Convergence Rate was 0.053 and in the conditional models, its’ values were estimated to be 0.054 and 0.059, respectively. These findings show that the estimated Conditional Beta-Convergence Rate is higher while considering social security expenditures. Additionally, results revealed that the Misery Index and the Government Size have a negative and significant effect, while the Information and Communication Technology (ICT) and Human Capital have a positive and significant effect on the convergence of social welfare. Finally, an estimation of the Spatial Spillover Effects of social security expenditures in 2019 showed that each one of the provinces has the highest direct effect coefficient on itself, and then has the highest effect on neighboring provinces.