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Are the Poor Protected from Budget Cuts? Evidence for Argentina

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Abstract

Macroeconomic adjustment programs often emphasize the need to protect social spending from cuts, and to protect pro-poor spending in particular. But does this happen in practice during fiscal contractions? The paper presents evidence for Argentina. Using aggregate time series data the paper first finds that social spending was not protected historically, although more "pro-poor" social spending was no more vulnerable. Turning next to new data for an externally-financed workfare scheme introduced in response to a macro crisis, the paper finds that this program was far better targeted than other social spending. However, it appears that the program still had to assure that a small but relatively well-protected share of its benefits went to the non-poor. This appears to be a political economy constraint.

Suggested Citation

  • Martin Ravallion, 2002. "Are the Poor Protected from Budget Cuts? Evidence for Argentina," Journal of Applied Economics, Universidad del CEMA, vol. 5, pages 95-121, May.
    • Handle: RePEc:cem:jaecon:v:5:y:2002:n:1:p:95-121
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    References listed on IDEAS

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    1. Jalan, Jyotsna & Ravallion, Martin, 1999. "Income gains to the poor from workfare - estimates for Argentina's TRABAJAR Program," Policy Research Working Paper Series 2149, The World Bank.
    2. Nora Lustig, 2000. "Crises and the Poor: Socially Responsible Macroeconomics," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2000), pages 1-30, August.
    3. 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.
    4. Ravallion, Martin, 1999. "Are poorer states worse at targeting their poor?," Economics Letters, Elsevier, vol. 65(3), pages 373-377, December.
    5. Ravallion, Martin, 1999. "Appraising Workfare," The World Bank Research Observer, World Bank, vol. 14(1), pages 31-48, February.
    6. Ravallion, Martin, 2000. "Monitoring Targeting Performance When Decentralized Allocations to the Poor Are Unobserved," The World Bank Economic Review, World Bank, vol. 14(2), pages 331-345, May.
    7. Lanjouw, Peter & Ravallion, Martin, 1998. "Benefit incidence and the timing of program capture," Policy Research Working Paper Series 1956, The World Bank.
    8. Brown, David S. & Hunter, Wendy, 1999. "Democracy and Social Spending in Latin America, 1980–92," American Political Science Review, Cambridge University Press, vol. 93(4), pages 779-790, December.
    9. De Donder, Philippe & Hindriks, Jean, 1998. "The Political Economy of Targeting," Public Choice, Springer, vol. 95(1-2), pages 177-200, April.
    10. Ravallion,Martin, 2000. "Are the poor protected from budget cuts? theory and evidence for Argentina," Policy Research Working Paper Series 2391, The World Bank.
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    Cited by:

    1. Elizabeth M. King & Jere R. Behrman, 2009. "Timing and Duration of Exposure in Evaluations of Social Programs," The World Bank Research Observer, World Bank, vol. 24(1), pages 55-82, February.
    2. Ortiz, Isabel, & Cummins, Matthew. & Karunanethy, Kalaivani., 2015. "Fiscal space for social protection and the SDGs options to expand social investments in 187 countries," ILO Working Papers 994877663402676, International Labour Organization.
    3. Isabel Ortiz & Jingqing Chai & Matthew Cummins, 2011. "Identifying Fiscal Space:Options for Social and Economic Development for Children and Poor Households in 184 Countries," Working papers 1108, UNICEF,Division of Policy and Strategy.
    4. Gentilini, Ugo & Omamo, Steven Were, 2011. "Social protection 2.0: Exploring issues, evidence and debates in a globalizing world," Food Policy, Elsevier, vol. 36(3), pages 329-340, June.
    5. Research Group, Development, 2008. "Lessons from World Bank Research on Financial Crises," Policy Research Working Paper Series 4779, The World Bank.
    6. Sanz, Ismael & Velazquez, Francisco J, 2003. "What do OECD countries cut first at a time of fiscal adjustments? A dynamic panel data approach," University of California at Santa Barbara, Economics Working Paper Series qt4j744960, Department of Economics, UC Santa Barbara.
    7. Ronald Mendoza & Ronald, 2010. "Inclusive Crises, Exclusive Recoveries, and Policies to Prevent a Double Whammy for the Poor," Working papers 1004, UNICEF,Division of Policy and Strategy.
    8. Isabel Ortiz & Jingqing Chai & Matthew Cummins & Gabriel Vergara, 2010. "Prioritizing Expenditures for a Recovery for All: A Rapid Review of Public Expenditures in 126 Developing," Working papers 1007, UNICEF,Division of Policy and Strategy.

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    More about this item

    Keywords

    Fiscal incidence; social spending; budget cuts; Argentina;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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