Are the Poor Protected from Budget Cuts? Evidence for Argentina

Martin Ravallion

Journal of Applied Economics, 2002, vol. 5, issue 1, 95-121

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.

Date: 2002
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DOI: 10.1080/15140326.2002.12040572

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