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The dynamics of poverty and the effectiveness of Poland's safety net (1993-96)

  • Okrasa,Wlodzimierz

The author analyzes how the incidence of household endowments and the allocation of social benefits affect families'transitions into and out of poverty. Using panel data for 1993-96 from Poland's Household Budget Survey, and a framework based on sample survival analysis techniques, the author evaluates how various policies will affect households with specific characteristics that make them likely to become poor or to move out of poverty under different scenarios (including whether or not they receive a given amount of a particular type of social transfer). He also discusses how non-income sources of welfare, such as savings, credits, and loans, affect the likelihood that families will become or stop being poor. He concludes that family allowances and unemployment benefits, the two major social programs analyzed, have significant but different effects on different groups of households (characterized in terms of age, gender, marital status, and educational attainment of the head of household; the size, type, location, and sector of employment of the family or household; and the year in which the household fell into poverty). If the share of the family allowances in total household income were reduced by 1 percent, for example, the average length of poverty would be increased by roughly 2 percent. But a 1 percent change in unemployment benefits would yield a 3 percent change in the average duration of poverty. Differences in hazard rates for various subgroups would be even greater. Households in villages were much more likely to fall into poverty than households in cities and large towns, but the poor in towns and cities had more difficulty exiting poverty. There was generally less poverty mobility among households headed by public sector employees than among those headed byemployees in the private sector. Families with three or more children and one-parent families (and grandparents with children) faced the greatest risk of being poor; single-person households and childless married couples were the least endangered . Small nuclear families with one or two children and families without children fell between these two extremes.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2221.

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Date of creation: 30 Nov 1999
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Handle: RePEc:wbk:wbrwps:2221
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  1. Angus Deaton, 1989. "Saving and Liquidity Constraints," NBER Working Papers 3196, National Bureau of Economic Research, Inc.
  2. Duncan, Greg J, et al, 1993. "Poverty Dynamics in Eight Countries," Journal of Population Economics, Springer, vol. 6(3), pages 215-34.
  3. Glewwe, P. & Hall, G., 1995. "Who is Most Vulnerable to Macroeconomic Shocks? Hypotheses Tests Using Panel Data from Peru," Papers 117, World Bank - Living Standards Measurement.
  4. Keane, Michael & Prasad, Eswar, 1998. "Consumption and Income Inequality in Poland During the Economic Transition," Working Papers 98-38, C.V. Starr Center for Applied Economics, New York University.
  5. Atkinson, A. B. & Sutherland, H., 1998. "Microsimulation and Policy Debate: A Case Study of the Minimum Pension Guarantee in Britain," Cambridge Working Papers in Economics 9815, Faculty of Economics, University of Cambridge.
  6. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-34, November.
  7. Alderman, Harold & Paxson, Christina H & DEC, 1992. "Do the poor insure? A synthesis of the literature on risk and consumption in developing countries," Policy Research Working Paper Series 1008, The World Bank.
  8. Jan Rutkowski, 1996. "High skills pay off: the changing wage structure during economic transition in Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 89-112, 05.
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