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Social safety net and the poor during the transition : the case of Bulgaria


  • Hassan, Fareed M. A.
  • Peters, R. Kyle, Jr.


Using data from the 1992 Bulgarian household budget survey, the authors analyze the structure of income in Bulgaria, identifying who the poor are and how they are reached by the social safety net. Their main findings about household incomes: (a) Social transfers provide an extremely large component - 24 percent - of household income per capita. That is roughly on a par with the share in other Eastern European countries but more than 40 percent higher than the share of the Organization for Economic Cooperation and Development (OECD) countries. (b) Wage earnings have declined as a source of income, reflecting the counteraction of the state sector. Wage income in Bulgaria has declined to only half the OECD level. (c) Income from self-employment has increased, reflecting the surge in small-scale retail establishments. Income is considerably less concentrated in Bulgaria than in other lower-middle-income countries. The author's main findings about the poor (the bottom 20 percent in terms of household income): The head of household in a poor home tends to be older, a woman, poorly educated, and unemployed. Poor households are not necessarily larger households in Bulgaria, unlike in other developing countries. The sources of income in poor Bulgarian households reflect other findings: (a) The poor depend for more than half their income on social benefits (especially pensions), indicating the importance of the social safety net. (b) The social safety net is not well targeted. Most social benefits are pro-poor, in the sense that they improve income distribution, but many benefits accrue to better-off households. There is substantial scope for better distribution of income. The authors conclude that comprehensive reform of social benefits is needed, focusing on pensions, unemployment benefits, child allowances, and social assistance.

Suggested Citation

  • Hassan, Fareed M. A. & Peters, R. Kyle, Jr., 1995. "Social safety net and the poor during the transition : the case of Bulgaria," Policy Research Working Paper Series 1450, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1450

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    References listed on IDEAS

    1. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657 Elsevier.
    2. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
    3. UNICEF Innocenti Research Centre. MONEE project, 1993. "Public Policy and Social Conditions," Papers remore93/8, Regional Monitoring Report.
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    Cited by:

    1. Ligon, Ethan A., 2011. "Dynamics, risk, and vulnerability," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt8kw7k2dz, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Skoufias, Emmanuel, 2004. "Consumption smoothing during the economic transition in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 328-347, June.


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