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Social Transfers, Labor Supply and Poverty Reduction: The Case of Albania

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  • Dabalen, Andrew

    ()
    (The World Bank)

  • Kilic, Talip

    ()
    (The World Bank)

  • Wane, Waly

    ()
    (The World Bank)

Abstract

In 1993, in response to persistent unemployment, and rising poverty and social unrest, the government of Albania introduced an anti-poverty program, namely Ndihma Ekonomike; in 1995 it was extended to all poor households. This paper estimates the separate effects of participation in this income support program and the old-age pension program on objective and subjective measures of household poverty. The analysis uses the nationally representative Albanian Living Standards Measurement Surveys carried out in 2002 and 2005. Using propensity score matching methods, the paper finds that Ndihma Ekonomike households, particularly urban residents, have lower per capita consumption and are more likely to be discontented with their lives, financial situation, and consumption levels than their matched comparators. In contrast, households receiving pensions are not significantly different from their matched comparators in reference to the same set of outcomes. The paper finds that the negative impact of Ndihma Ekonomike participation on welfare is driven by a negative labor supply response among work-eligible individuals. This negative labor response is larger among women and urban residents. In contrast to Ndihma Ekonomike, the receipt of old-age pension income transfers does not significantly impact the labor supply of prime-age individuals living in pension households

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4783.

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Length: 55 pages
Date of creation: 01 Nov 2008
Date of revision:
Handle: RePEc:wbk:wbrwps:4783

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Keywords: Social protection; Labor supply; Albania;

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References

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  1. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity score matching methods for non-experimental causal studies," Discussion Papers, Columbia University, Department of Economics 0102-14, Columbia University, Department of Economics.
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  3. Victoria Hosegood & Anne Case & Cally Ardington, 2009. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," American Economic Journal: Applied Economics, American Economic Association, American Economic Association, vol. 1(1), pages 22-48, January.
  4. Emmanuel Saez, 2000. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," NBER Working Papers 7708, National Bureau of Economic Research, Inc.
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  7. Moffitt, Robert A., 2002. "Welfare programs and labor supply," Handbook of Public Economics, Elsevier, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 34, pages 2393-2430 Elsevier.
  8. Hausman, Jerry A., 1985. "Taxes and labor supply," Handbook of Public Economics, Elsevier, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 4, pages 213-263 Elsevier.
  9. Sulo Haderi & Harry Papapanagos & Peter Sanfey & Mirela Talka, 1996. "Inflation and Stabilization in Albania," Studies in Economics, Department of Economics, University of Kent 9613, Department of Economics, University of Kent.
  10. Anne Case & Angus Deaton, 1996. "Large Cash Transfers to the Elderly in South Africa," NBER Working Papers 5572, National Bureau of Economic Research, Inc.
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  14. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(4), pages 605-54, October.
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Cited by:
  1. Lucia Mangiavacchi & Paolo Verme, 2009. "Evaluating Pro-poor Transfers When Targeting is Weak: The Albanian Ndihma Ekonomike Program Revisited," Working Papers - Economics wp2009_08.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  2. Tomini, Sonila & Groot, Wim, 2012. "Paying informally for public health care in Albania: scarce resources or governance failure?," MERIT Working Papers 070, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  3. Leibbrandt, Murray & Lilenstein, Kezia & Shenker, Callie & Woolard, Ingrid, 2013. "The influence of social transfers on labour supply: A South African and international review," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 112, Southern Africa Labour and Development Research Unit, University of Cape Town.

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