Poverty and Social Assistance in Transition Countries

Transcription

1 Poverty and Social Assistance in Transition Countries

2

3 Poverty and Social Assistance in Transition Countries Jeanine Braithwaite Christiaan Grootaert Branko Milanovic St. Martin's Press NewYork

4 POVERTY AND SOCIAL ASSISTANCE IN TRANSITION COUNTRIES Copyright Jeanine Braithwaite, Christiaan Grootaert, and Branko Milanovic All rights reserved. Printed in the United States of America. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews. For information, address St. Martin's Press, 175 Fifth Avenue, New York, N.Y Softcover reprint of the hardcover 1 st edition ISBN ISBN (ebook) DOI / Library of Congress Cataloging-in-Publication Data Braithwaite, Jeanine. Poverty and social assistance in transition countries / Jeanine Braithwaite, Christiaan Grootaert, Branko Milanovic p.cm. Includes bibliographical references and index. 1. Poverty-Europe, Eastern. 2. Poverty-Former Soviet republics. 3. Europe, Eastern-Economic conditions Former Soviet republics-economic conditions. 5. Europe, Eastern-Social policy. 6. Former Soviet republics-social policy. I. Grootaert, Christiaan, II. Milanovic, Branko. III. Title. HC244.Z9P '8' dc CIP Design by Binghamton Valley Composition First edition: March, Transferred to Digital Printing 2011

5 CONTENTS Acknowledgments Preface VB IX Chapter 1: The Transition Economies in the Study: How Similar and Different They Are 1 Branko Milanovic Chapter 2: The Determinants of Poverty in Eastern Europe and the Former Soviet Union 17 Christiaan Grootaert and Jeanine Braithwaite Chapter 3: The Role of Soeial Assistance in Addressing Poverty 99 Branko Milanovic Chapter 4: Poliey Reeommendations and General Conclusions 157 Jeanine Braithwaite, Christiaan Grootaert, and Branko Milanovic Notes 171 References 179 Index 185

6

7 ACKNOWLEDGMENTS WE WOULD LIKE TO TRANK Robert Ackland, Mark Foley, Thesia Garner, Gi-Taik Oh, Sandor Sipos, Sasoun Tsirounian, and Yvonne Ying for their assistance in preparing and using the database, and Susan Assaf, Precy Lizarondo and Gracie Ochieng for their assistance with document processing. Financial support from the World Bankfs Research Committee is gratefully acknowledged. The findings, interpretation, and conclusions expressed in this study are entirely those of the authors and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent.

8

9 PREFACE THIS BOOK IS THE PRODUCT OF RESEARCH on determinants of poverty and targeting of sodal assistance in Eastern Europe and the former Soviet Union (FSU). The research was done during the years 1996 and 1997, using household budget surveys from six transition countries for the period The motivation for this research lies in the increased interest exhibited in the transition economies as weh as in the World Bank in issues of (what is in the economic jargon cahed) "targeting," that is, in improving the delivery of sodal assistance so that it reaches those who need it. This increased interest sterns from the current emphasis on poverty reduction and sodal equity within the World Bank and its member governments, as weh as from finandal constraints faced by most transition countries' governments that make the continuation of the provision of a quasi-universal sodal safety net unaffordable. Our key objective was to try to make meaningful policy recommendations on how to improve targeting. But in order to do so, we must know whom to target, that is, who are the poor. Thus, after a brief discussion of the countries included in the study in Chapter 1, we analyze in Chapter 2 the determinants of poverty in the selected transition economies. We study whether poverty is assodated with specific demographic traits and economic characteristics and whether these characteristics are more or less similar across the transition economies. Our objective in Chapter 2 is to derive relatively robust conclusions regarding the factors that are linked with poverty, how important they are, and if and why they differ among

10 x PREFACE the countries. These conclusions have direct policy implications for (1) targeting by indicators (e.g., by family size or region); (2) the role of education in reducing poverty; (3) the importance of unemployment as an explanator of poverty (as opposed to, for example, the working poor). In Chapter 3, we discuss the targeting of social assistance. In all countries, social assistance offices have a certain income cutoff point, whether official or de facto, which they use to screen those who are eligible for social assistance from those who are not. Taking this cutoff point, our objective is to investigate if there are systematic biases against or in favor of certain household types. For example, if for a given income level rural households have systematically a lower chance to be helped, then there is a pro-urban bias in the system. The cause of this bias, for example, une qual allocation of government money between rural and urban areas, greater importance of unrecorded incomes in villages, lack of rural population's knowledge about the available social assistance, or some other factor, can be investigated through neld visits. Policy conclusions regarding the possible improvements in the delivery of social assistance thus combine the results derived from the desk study based on the survey data, and field work. In order to study these topics, a very large and standardized data base has been constructed using household- and individual-level data from the existing income and expenditure surveys. The surveys were conducted over the period The countries included in the study were originally eight. Four are East European countries: Hungary (date of survey: 1993), Bulgaria (1995), Po land (1993), and Slovakia (1993). Four were part of the former Soviet Union: Estonia (1995) in the Baltics, Armenia (1994) in the Caucasus, the Kyrgyz republic (1993) in Central Asia, and Russia ( ). For all the countries except Armenia, the Kyrgyz republic, and Russia, we used the official survey data collected by the countries' statistical offices. For the Kyrgyz republic and Russia, we used the living standards surveys partly financed by the World Bank. For Armenia, we used a household survey produced by the State Committee on Statistics and the Yerevan University Department of Sociology.

11 PREFACE xi In selecting the countries to study, our first requirement was to have access to the individual- and household-ievel data from a nationally representative survey. The task was then to make the variables as comparable as possible across the countries, by ensuring either that a given variable (e.g., wage income, food expenditure, education level, housing ownership) is defined the same way in each country survey, or if this was not possible, to document clearly the definitional differences. During the exacting and lengthy process of variable standardization, we found ourselves compelled to drop two countries-armenia and Slovakia-from the analysis because of what we consider to be potentially serious flaws within the surveys themselves, or inconsistencies between the variable definitions in the two surveys and other surveys that could not be overcome. 1 The entire database, referred by the acronym HEIDE (Household Expenditure and Income Data for Transition Economies) is in STATA format. It contains 72 "standardized" variables2 for the eight countries, and is available from the World Bank (for a small fee, needed to cover reproduction costs).3