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This paper analyzes the subjective impact of the global economic crisis on households in Europe and Central Asia and relates subjective impacts to consumption, actual shocks, and coping strategies, using the 2010 Life in Transition Survey. Two-thirds of respondents in Europe and Central Asia report their household was subjectively affected, primarily through the labor market. The findings underscore the limitations of cross-country comparisons of subjective perceptions, due to reporting biases. Within countries, richer households felt a decline in their relative income position, consistent with evidence from household budget surveys that the crisis reduced the consumption of the middle and upper classes. But the analysis also finds that poorer households report being (subjectively) affected by the crisis more. Differences in the feasibility of coping strategies may help explain variations in subjective perceptions: the poorest were forced to reduce their staple food consumption and health spending, and tended to depend on public safety nets. Richer households had more options to cope, pursuing so-called "active strategies" (such as increasing their labor supply), borrowing, and cutting spending on non-essentials. Transition countries differed significantly from western European comparator countries in that public safety nets had lower coverage, private safety nets and informal insurance mechanisms could not meet the shortfall in income, and a large proportion of their populations reduced the consumption of basic necessities. The paper finds subjective perceptions of the impact of the crisis to be relevant to socio-political outcomes: the harder the impact, the lower the life satisfaction level and the more negative the assessment of government performance.
Consumption --- Coping --- Crisis --- Housing & Human Habitats --- Labor Policies --- Life satisfaction --- Macroeconomics and Economic Growth --- Poverty --- Poverty Reduction --- Rural Poverty Reduction --- Safety Nets and Transfers --- Subjective welfare
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This paper uses household survey data collected in September-October 2009 on a nationally representative sample of 2,000 households in Bangladesh to examine the nature of shocks experienced by households over the preceding 12 months and the type of coping mechanisms that were adopted. The analysis finds that more than half the sample claimed to have faced a shock-economic, health, climatic, or asset related-over the previous year. Surprisingly, the non-poor face a larger share of these shocks compared with the poor. A closer look at this result shows that the non-poor report a significantly larger share of "asset-related" shocks, which is consistent with the fact that the poor have fewer assets to lose. Health-related shocks dominate and households appear to have coped with these shocks through savings and loans, help from friends, and depletion of assets. The results show that households, when faced with covariate shocks due to climatic reasons, are less able to cope. As would be expected, the poor are less able to cope with shocks compared with the non-poor; the poor are more likely to use coping mechanisms that could have negative welfare implications in the longer term, including the depletion of assets, reduction of essential consumption, and use of high-interest loans. Econometric analysis suggests that geographical location, socio-economic status, and access to microfinance all affect the ability to cope with shocks. Policy implications include the importance of developing safety nets that take into account the vulnerability to climate-related shocks and further developing the links between micro-finance and safety net programs.
Access to Finance --- Housing & Human Habitats --- Microfinance --- Poor --- Rural Poverty Reduction --- Safety nets --- Safety Nets and Transfers --- Shocks --- Small Area Estimation Poverty Mapping --- Social Protections and Labor --- Bangladesh
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Severe weather shocks recurrently hit Malawi, and they adversely affect the incomes of many farm households as well as small businesses. With climate change, the frequency of extreme weather events is expected to increase further. A clear understanding of households' vulnerability to shock-induced poverty is critical for disaster risk management and the design of scalable social safety net programs. Standard poverty measures rely on static snapshots that are suitable for quantifying structural poverty but not for assessing the vulnerability of non-poor households to fall below the poverty line when they experience shocks. This study uses a nationally representative household survey and exogenously measured weather shocks to assess households' vulnerability to poverty in Malawi. To accurately estimate the impacts of shocks on consumption and vulnerability, the study excludes any kind of assistance (aid and food or cash transfers) that households might have received after major disasters. The key findings of the study are as follows: (1) drought during the growing season decreases non-assistance consumption per capita by 5-12 percent, depending on its intensity; (2) excess rainfall at the onset of the growing season reduces food consumption by 1.8 percent, while excess rainfall later in the growing season appears to increase consumption; (3) vulnerability to poverty is generally higher than static poverty, especially compared to static poverty measured during a good weather year; and (4) in years of extreme droughts, such as 2016, recorded poverty rates are higher than vulnerability, which indicates that the magnitude of drought in 2016 was so large that the chance of falling below the poverty line as a result of an even higher magnitude shock was low. These results suggest that identifying vulnerable households is key in designing adaptive social safety net programs that can be scaled up to cover those who become eligible for such programs after experiencing shocks.
Drought --- Drought Management --- Extreme Weather --- Flood Control --- Floods --- Natural Disasters --- Rainfall --- Safety Nets and Transfers --- Services and Transfers To Poor --- Social Safety Nets --- Vulnerability --- Weather Shocks --- Welfare
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Subsidized or free distribution of food has been a central pillar of social protection programs in many countries. With the number of forcibly displaced persons at record levels, the question arises of whether in-kind food transfer programs are effective in mitigating the loss of welfare induced by forced displacement. This paper examines whether Iraq's Public Distribution System, a universal food subsidy program, has buffered the impacts of displacement on households. Using propensity score matching to account for the observable differences between Public Distribution System recipients and non-recipients, the analysis finds that displaced households with continued access to Public Distribution System benefits have higher food and non-food expenditures compared with displaced households that lost access. Likewise, the beneficiaries have higher calorie intakes and are less vulnerable to falling into poverty. However, displaced beneficiaries remained significantly worse off and more vulnerable to poverty than non-displaced households, suggesting that, although the Public Distribution System helped mitigate displacement to a degree, it may not be the most effective protection program for such shocks. Given the considerable resources the universal program consumes, it is vital to think of alternative approaches, such as targeted cash transfers, that might be more effective in protection and cost.
Displacement --- Food Distribution --- Food Subsidy --- In-Kind Transfers --- Poverty Reduction --- Public Distribution --- Safety Nets and Transfers --- Services and Transfers to Poor --- Social Protections and Labor --- Welfare
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This paper analyzes the subjective impact of the global economic crisis on households in Europe and Central Asia and relates subjective impacts to consumption, actual shocks, and coping strategies, using the 2010 Life in Transition Survey. Two-thirds of respondents in Europe and Central Asia report their household was subjectively affected, primarily through the labor market. The findings underscore the limitations of cross-country comparisons of subjective perceptions, due to reporting biases. Within countries, richer households felt a decline in their relative income position, consistent with evidence from household budget surveys that the crisis reduced the consumption of the middle and upper classes. But the analysis also finds that poorer households report being (subjectively) affected by the crisis more. Differences in the feasibility of coping strategies may help explain variations in subjective perceptions: the poorest were forced to reduce their staple food consumption and health spending, and tended to depend on public safety nets. Richer households had more options to cope, pursuing so-called "active strategies" (such as increasing their labor supply), borrowing, and cutting spending on non-essentials. Transition countries differed significantly from western European comparator countries in that public safety nets had lower coverage, private safety nets and informal insurance mechanisms could not meet the shortfall in income, and a large proportion of their populations reduced the consumption of basic necessities. The paper finds subjective perceptions of the impact of the crisis to be relevant to socio-political outcomes: the harder the impact, the lower the life satisfaction level and the more negative the assessment of government performance.
Consumption --- Coping --- Crisis --- Housing & Human Habitats --- Labor Policies --- Life satisfaction --- Macroeconomics and Economic Growth --- Poverty --- Poverty Reduction --- Rural Poverty Reduction --- Safety Nets and Transfers --- Subjective welfare
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Reducing poverty in developing countries is one of the most persistent challenge facing the world today. The governments and civil societies of developing countries are in the forefront of the battle to reduce poverty. Institutions such as the World Bank are working to improve their efforts to help governments. The Bank works with governments in supporting poverty reduction objectives in a wide variety of ways, including by providing information, analysis and financial assistance, and by liaising with other donors. This report examines how far developing countries have come towards meeting the challenge of reducing poverty since 1990 and how the Bank's support for their efforts has evolved. The report concludes that some progress has been made in reducing poverty in the developing world since the late 1980s, although there have been important regional variations in both outcomes and circumstances. It confirms the crucial importance of growth for reducing poverty. The report also finds that the Bank has made good progress in implementing its poverty reduction strategy, but the challenge remains substantial. The report is organized as follows. Chapter 1 examines worldwide trends in poverty and welfare indicators from the late 1980s to the mid-1990s and assesses the extent to which poverty has fallen. Chapter 2 outlines how the Bank has been supporting government efforts to reduce poverty at the country level since 1990 and reports on progress made by the Bank in fiscal 1995. Chapter 3 uses the latest household survey data and other sources of information to explore the impact that various key factors (growth, adjustment reforms, public expenditures, and projects) have had on reducing poverty. Finally, chapter 4 discusses important lessons learned about reducing poverty and highlights several areas that need to be emphasized in the future.
Health, Nutrition and Population --- Population Policies --- Poverty Reduction --- Pro-Poor Growth --- Rural Development --- Rural Poverty Reduction --- Safety Nets and Transfers --- Social Protections and Labor
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To mitigate the impact of the 2008-2010 global financial crisis on vulnerable households, the Government of Latvia established Workplaces with Stipends, an emergency public works program that targeted registered unemployed people who were not receiving unemployment benefits. This paper evaluates the targeting performance and welfare impacts of the program. It exploits the over-subscription of Workplaces with Stipends to define a control group. The paper finds that the program was successful at targeting poor and vulnerable people, and that leakage to non-poor households was small. Using propensity score matching, the paper finds that the program's stipend mitigated the impact of job loss and, in the short term, raised participating household incomes by 37 percent relative to similar households not benefiting from the program. The paper also finds that the foregone income for this program was less than foregone incomes estimated in other countries. This suggests a dearth of income-generating opportunities in Latvia; thus the program provided temporary employment opportunities and helped the unemployed mitigate the impact of the crisis. However, relative to the depth of the crisis in Latvia, the Workplaces with Stipends program scale was small, which meant long waiting periods for program applicants.
Crisis --- Labor Markets --- Labor Policies --- Macroeconomics and Economic Growth --- Poverty Monitoring & Analysis --- Public Works --- Safety Net --- Safety Nets and Transfers --- Services & Transfers to Poor --- Latvia
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This paper uses household survey data collected in September-October 2009 on a nationally representative sample of 2,000 households in Bangladesh to examine the nature of shocks experienced by households over the preceding 12 months and the type of coping mechanisms that were adopted. The analysis finds that more than half the sample claimed to have faced a shock-economic, health, climatic, or asset related-over the previous year. Surprisingly, the non-poor face a larger share of these shocks compared with the poor. A closer look at this result shows that the non-poor report a significantly larger share of "asset-related" shocks, which is consistent with the fact that the poor have fewer assets to lose. Health-related shocks dominate and households appear to have coped with these shocks through savings and loans, help from friends, and depletion of assets. The results show that households, when faced with covariate shocks due to climatic reasons, are less able to cope. As would be expected, the poor are less able to cope with shocks compared with the non-poor; the poor are more likely to use coping mechanisms that could have negative welfare implications in the longer term, including the depletion of assets, reduction of essential consumption, and use of high-interest loans. Econometric analysis suggests that geographical location, socio-economic status, and access to microfinance all affect the ability to cope with shocks. Policy implications include the importance of developing safety nets that take into account the vulnerability to climate-related shocks and further developing the links between micro-finance and safety net programs.
Access to Finance --- Housing & Human Habitats --- Microfinance --- Poor --- Rural Poverty Reduction --- Safety nets --- Safety Nets and Transfers --- Shocks --- Small Area Estimation Poverty Mapping --- Social Protections and Labor --- Bangladesh
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While climate change is likely to increase weather risks in many developing countries, there is little evidence on effective policies to facilitate adaptation. This paper presents experimental evidence on a program in rural Nicaragua aimed at improving households' risk-management through income diversification. The intervention targeted agricultural households exposed to weather shocks related to changes in rainfall and temperature patterns. It combined a conditional cash transfer with vocational training or a productive investment grant. The authors identify the relative impact of each complementary package based on randomized assignment, and analyze how impacts vary by exposure to exogenous drought shocks. The results show that both complementary interventions provide full protection against drought shocks two years after the end of the intervention. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions led to diversification of economic activities and better protection from shocks compared to beneficiaries of the basic conditional cash transfer and control households. These results show that combining safety nets with productive interventions can help households manage future weather risks and promote longer-term program impacts.
Adaptation --- Cash transfers --- Climate change --- Diversification --- Drought --- Gender --- Housing & Human Habitats --- Poverty Reduction --- Productive investment --- Randomized experiment --- Regional Economic Development --- Risk --- Risk-management --- Rural Poverty Reduction --- Safety Nets and Transfers --- Vocational training --- Welfare --- Nicaragua.
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While the 2008 financial crisis is global in nature, it is likely to have heterogeneous welfare impacts within the developing world, with some countries, and some people, more vulnerable than others. It also threatens to have lasting impacts for some of those affected, notably through the nutrition and schooling of children in poor families. These features point to the need for a differentiated social policy response, aiming to provide rapid income support to those in most need, while preserving the key physical and human assets of poor people and their communities. The paper points out some mistakes in past crisis responses and identifies key design features for safety net programs that can help compensate for the likely welfare losses in the short-term while also promoting longer-term recovery.
Economic growth --- Financial crisis --- Income --- Income support --- Poor --- Poverty line --- Poverty Reduction --- Rural Development --- Rural Poverty Reduction --- Safety net --- Safety net programs --- Safety Nets and Transfers --- Services and Transfers to Poor --- Social policy --- Social protection --- Social Protections and Labor
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