Social Impacts of the Asian Crisis: Policy Challenges and Lessons
This paper documents the social impacts of the financial crisis in Asia. We provide a general overview of the cause and the evolution of the crisis and highlight the differences as well as the similarities among the Asian countries. In particular, the impacts of the crisis on unemployment, real wage, poverty, and income inequality are analyzed using the cross-country data set, which consists of all the countries that have received financial assistance from the IMF over the period from 1973 to 1994. The stylized pattern of employment growth in previous IMF program countries indicates that employment growth is more sluggish in the recovery process compared with other macroeconomic variables. Hence, unemployment rates can remain high for a long period even after the crisis ends in the Asian countries. We also find that the crisis aggravates the poverty problem for the marginal group of the population over a significant period even though it does not bear a long-term effect on overall income distribution. Policy implications of our findings in building social safety nets in Asia are also discussed.
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|Date of creation:||Jul 1999|
|Date of revision:|
|Publication status:||Published as background research for the 1999 Human Development Report.|
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