Are the poor protected from budget cuts? theory and evidence for Argentina
Adjustment programs often emphasize protecting social spending - especially pro-poor spending - from cuts. Yet the incidence of fiscal contraction - and hence the case for action to protect public spending on the poor at a time of overall fiscal austerity - is an empirical question, which the author addresses using data from Argentina. Aggregate budget cuts in Argentina in the 1980s and 1990s, typically brought proportionately greater cuts in social spending."Non-social"spending was protected. But proportionate cuts for types of social spending that matter more to the poor, were about the same as the cuts for those that tend to favor the non-poor. Absolute cuts were in fact greater for"social insurance"that matters more to the non-poor. But spending on targeted social assistance, and employment programs, was more vulnerable to aggregate spending cuts, than were more universal social services. Social spending was clearly exposed to fiscalcontraction, but this was somewhat less true of pro-poor spending on things that also benefited the non-poor. So fine targeting may be a mixed blessing for the poor, bringing greater vulnerability to cuts, possibly when help is most needed. There is a strong case for action to protect pro-poor social spending at such times. An externally financed work-fare scheme in Argentina was far better targeted than other social spending, but still had to ensure that a small, but relatively well-protected share of the benefits went to the non-poor. The program was clearly subject to the same political economy constraints that influenced the incidence of past fiscal contractions in Argentina. The program expanded into poor areas when the budget increased, but retreated from poor areas when the program was cut. It was the program's disbursements to non-poor areas that were protected. Still, given the low wage rate offered, the direct benefits from the program were still likely to have favored the poor, even after the cuts.
|Date of creation:||31 Jul 2000|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ravallion, Martin, 2000.
"Monitoring Targeting Performance When Decentralized Allocations to the Poor Are Unobserved,"
World Bank Economic Review,
World Bank Group, vol. 14(2), pages 331-345, May.
- Ravallion, 1999. "Monitoring targeting performance when decentralized allocation to the poor are unobserved," Policy Research Working Paper Series 2080, The World Bank.
- Ravallion, Martin, 1999. "Is more targeting consistent with less spending?," Policy Research Working Paper Series 2079, The World Bank.
- Ravallion, Martin, 1999. "Appraising Workfare," World Bank Research Observer, World Bank Group, vol. 14(1), pages 31-48, February.
- De Donder, Philippe & Hindriks, Jean, 1998.
"The Political Economy of Targeting,"
Springer, vol. 95(1-2), pages 177-200, April.
- Lanjouw, Peter & Ravallion, Martin, 1998. "Benefit incidence and the timing of program capture," Policy Research Working Paper Series 1956, The World Bank.
- van de Walle, Dominique, 1998. "Targeting Revisited," World Bank Research Observer, World Bank Group, vol. 13(2), pages 231-248, August.
- Martin Ravallion, 1999. "Is More Targeting Consistent with Less Spending?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 411-419, August.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2391. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.