Fiscal Policy as a Tool for Gender Equity in El Salvador

This paper analyzes fiscal incidence in El Salvador through a gender lens using the Commitment to Equity model. The study aims to identify fiscal policies that promote gender equality and facilitates evidence-based policy recommendations aimed at reducing gender disparities and promoting more inclusive fiscal policies. The analysis shows that fiscal policy is not pro-poor, as it can lead to a 3.1 percentage point increase in overall poverty using the US$6.85 2017 purchasing power parity poverty line, disproportionately impacting particular groups. Households headed by single women with at least one child under six years old experience a poverty rate increase of 4.3 percentage points, reaching an alarming rate of 42.7 percent. An increasing gender gap in poverty rates is also observed among households where women are the sole providers. The results show that the net fiscal system can increase the incidence of poverty among this group by 4.3 percentage points. In comparison, it increases by only 2.3 percentage points among their male counterparts. A microsimulation exercise of potential fiscal reforms to improve the welfare position of these households reveals that a fiscal package eliminating indirect subsidies, social security exemptions for vulnerable groups, and conditional cash transfers to households that meet certain conditions could reverse these unfavorable outcomes.