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Are the Poor Protected from Budget Cuts? Evidence for Argentina

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Abstract

Macroeconomic adjustment programs often emphasize the need to protect social spending from cuts, and to protect pro-poor spending in particular. But does this happen in practice during fiscal contractions? The paper presents evidence for Argentina. Using aggregate time series data the paper first finds that social spending was not protected historically, although more "pro-poor" social spending was no more vulnerable. Turning next to new data for an externally-financed workfare scheme introduced in response to a macro crisis, the paper finds that this program was far better targeted than other social spending. However, it appears that the program still had to assure that a small but relatively well-protected share of its benefits went to the non-poor. This appears to be a political economy constraint.

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File URL: http://www.cema.edu.ar/publicaciones/download/volume5/ravallion.pdf
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Bibliographic Info

Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): V (2002)
Issue (Month): (May)
Pages: 95-121

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Handle: RePEc:cem:jaecon:v:5:y:2002:n:1:p:95-121

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Keywords: Fiscal incidence; social spending; budget cuts; Argentina;

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References

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  1. Ravallion, Martin, 1999. "Appraising Workfare," World Bank Research Observer, World Bank Group, vol. 14(1), pages 31-48, February.
  2. Ravallion, 1999. "Monitoring targeting performance when decentralized allocation to the poor are unobserved," Policy Research Working Paper Series 2080, The World Bank.
  3. Martin Ravallion, 1999. "Is More Targeting Consistent with Less Spending?," International Tax and Public Finance, Springer, vol. 6(3), pages 411-419, August.
  4. Ravallion, Martin, 2000. "Are the poor protected from budget cuts? theory and evidence for Argentina," Policy Research Working Paper Series 2391, The World Bank.
  5. De Donder, Philippe & Hindriks, Jean, 1998. " The Political Economy of Targeting," Public Choice, Springer, vol. 95(1-2), pages 177-200, April.
  6. Jalan, Jyotsna & Ravallion, Martin, 1999. "Income gains to the poor from workfare - estimates for Argentina's TRABAJAR Program," Policy Research Working Paper Series 2149, The World Bank.
  7. Lanjouw, Peter & Ravallion, Martin, 1998. "Benefit incidence and the timing of program capture," Policy Research Working Paper Series 1956, The World Bank.
  8. Ravallion, Martin, 1999. "Are poorer states worse at targeting their poor?," Economics Letters, Elsevier, vol. 65(3), pages 373-377, December.
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Cited by:
  1. Sanz, Ismael & Velazquez, Francisco J, 2003. "What do OECD countries cut first at a time of fiscal adjustments? A dynamic panel data approach," University of California at Santa Barbara, Economics Working Paper Series qt4j744960, Department of Economics, UC Santa Barbara.
  2. Research Group, Development, 2008. "Lessons from World Bank Research on Financial Crises," Policy Research Working Paper Series 4779, The World Bank.
  3. Elizabeth M. King & Jere R. Behrman, 2009. "Timing and Duration of Exposure in Evaluations of Social Programs," World Bank Research Observer, World Bank Group, vol. 24(1), pages 55-82, February.

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