The Poor During a Period of Macroeconomic Adjustment: The Philippine Case

The first part of the paper describe the character of poverty alleviation during the second half of the 1980s. It shows that much of the (limited) poverty alleviation achieved during this period is attributable to intrasectoral improvement in the distribution of living standards. The relative importance of distributional effects varies substantially across locations and sectors of employment. In agriculture, where nearly two-thirds of the total poverty are found, the average proportionate increase in the incomes of the poorest 40 percent of the population was substantially higher than the average for the total population. The second part employs a simulation analysis to assess the probable short-run impact on poverty of certain structural adjustment policies. The analysis combines the wealth of information available in households surveys with the information on changes in meso variables (e.g., product and factor prices) generated from a macroeconomic model. It is shown that aggregate poverty may increase during the transition to sustainable growth. Particularly vulnerable are the numerically- large small agricultural producers and landless workers who are net buyers of food. This suggests that the provision of safety nets to the poor during an adjustment period must go beyond the urban sector to include as well the adversely affected households in rural areas.