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...
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| Format: | Publications & Research |
| Language: | en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://hdl.handle.net/10986/21409 |
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okr-10986-214092021-04-23T14:04:02Z Are the Poor Protected from Budget Cuts? Theory and Evidence for Argentina Ravallion, Martin poverty reduction strategies budget cuts adjustment programs social support fiscal contraction public spending aggregate variability social insurance programs employment strategies political constraints accounting basic education borrowing employment programs government spending health insurance household income housing income income support insurance macroeconomic stability municipalities negative externalities political economy political power political support poor poverty measures poverty programs provincial governments provincial spending public spending savings social assistance social funds social spending targeting tax taxation unemployment unemployment rate 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 fiscal contraction, 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. 2015-02-05T20:18:43Z 2015-02-05T20:18:43Z 2000-07 http://hdl.handle.net/10986/21409 en_US Policy Research Working Paper;No 2391 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean ARGENTINA |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
poverty reduction strategies budget cuts adjustment programs social support fiscal contraction public spending aggregate variability social insurance programs employment strategies political constraints accounting basic education borrowing employment programs government spending health insurance household income housing income income support insurance macroeconomic stability municipalities negative externalities political economy political power political support poor poverty measures poverty programs provincial governments provincial spending public spending savings social assistance social funds social spending targeting tax taxation unemployment unemployment rate |
| spellingShingle |
poverty reduction strategies budget cuts adjustment programs social support fiscal contraction public spending aggregate variability social insurance programs employment strategies political constraints accounting basic education borrowing employment programs government spending health insurance household income housing income income support insurance macroeconomic stability municipalities negative externalities political economy political power political support poor poverty measures poverty programs provincial governments provincial spending public spending savings social assistance social funds social spending targeting tax taxation unemployment unemployment rate Ravallion, Martin Are the Poor Protected from Budget Cuts? Theory and Evidence for Argentina |
| geographic_facet |
Latin America & Caribbean ARGENTINA |
| relation |
Policy Research Working Paper;No 2391 |
| description |
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 fiscal contraction, 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. |
| format |
Publications & Research |
| author |
Ravallion, Martin |
| author_facet |
Ravallion, Martin |
| author_sort |
Ravallion, Martin |
| title |
Are the Poor Protected from Budget Cuts? Theory and Evidence for Argentina |
| title_short |
Are the Poor Protected from Budget Cuts? Theory and Evidence for Argentina |
| title_full |
Are the Poor Protected from Budget Cuts? Theory and Evidence for Argentina |
| title_fullStr |
Are the Poor Protected from Budget Cuts? Theory and Evidence for Argentina |
| title_full_unstemmed |
Are the Poor Protected from Budget Cuts? Theory and Evidence for Argentina |
| title_sort |
are the poor protected from budget cuts? theory and evidence for argentina |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://hdl.handle.net/10986/21409 |
| _version_ |
1764448179640598528 |