Policy Brief: Income Dynamics and their Implications for Social Protection in the Occupied Palestinian Territory

This policy brief presents findings on income class dynamics over time in the OPT - assessing socio-economic strata, class composition, class mobility and intertemporal poverty - and translates these into recommendations for the social protection sector. This analysis aims to understand how the social protection system in the OPT can become more responsive to the dynamic nature of poverty.

The findings have several implications for social protection policy:

- Assessing both upward and downward income mobility helps develop a deeper understanding of poverty dynamics. The constant movement of households into and out of poverty highlights the importance of inclusive social protection.

- A smaller investment is required to prevent a household from falling into poverty than to pull one out of poverty as Poverty is more persistent than wealth.

- Social protection mechanisms that target on the criteria of chronic poverty address only a fraction of the problem. 40% of the poor nationally are transient poor and do not necessarily share the characteristics of the chronically poor.

- For poverty targeted assistance mechanisms (e.g. based on the proxy-means test (PMT)), achieving a very high frequency in beneficiary selection and recertification that matches the pace of change in the composition of the poor is necessary, though likely to be extremely difficult and costly.

- Despite the stark differences between the realities of the West Bank and Gaza Strip, it is evident that Inclusive Social Protection and extending coverage beyond extreme poverty – such as through lifecycle social grants and a social protection floor – is a necessity for sustainable poverty reduction in the Palestinian Territory.