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Social Science > Poverty and Homelessness

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Cover Technical Assistance Reports
Costa Rica: Technical Assistance Report-Universal Basic Pension: Objectives and Constraints
International Monetary Fund. Fiscal Affairs Dept.
At the request of the Ministry of Finance, a mission from the International Monetary Fund visited San Jose. The purpose of the mission was to assess the proposal to a universal basic pension and to estimate its fiscal and welfare impact on the budget, on pension schemes, and on old age income poverty. Costa Rica is entering a demographic transition which will see the old age dependency ratios significantly worsen in the coming 20 years. The long-term financial sustainability of the general social security pension scheme (IVM) is a concern, despite various reforms introduced over the past three decades and the scheme’s reserves are expected to be exhausted by the mid-2030s. The government’s proposal intends to address financial sustainability, the adequacy of coverage and of benefit levels, as well as distributional equity through the introduction of a universal basic pension. The IMF team’s assessment is that the proposal is unlikely to fully meet its stated objectives. The proposal will worsen social security pension scheme’s financial sustainability and create additional financing needs. This will translate into an accelerated exhaustion of IVM reserves and, after the reserves are depleted, require significant adjustments to IVM parameters or higher government transfers. Old age income security may be more effectively addressed, with less pronounced fiscal side-effects, through improving coverage and compliance in IVM and expanding the reach of the social pension scheme. The primary instruments of achieving these goals are: (a) amending the rules undermining compliance with registration and wage reporting regulations in the contributory schemes, (b) improving coordination between tax and contribution collection agencies, (c) amending the regulations governing eligibility for noncontributory social pensions and (d) ensuring the noncontributory social pension is adequately financed.
Keywords:
resident representative; IMF executive director; IMF Proposal; Asociación Costarricense; PBU replacement; Pensions; Pension spending; Aging; Income; Central America
Cover Selected Issues Papers
Options to Strengthen the Social Safety Net in Japan: Japan
Zhiyong An
and
Kohei Asao
Japan’s unemployment rate remains relatively low compared to other OECD countries. However, Japan’s poverty rate among the working-age population is one of the higher ones among OECD countries. The public assistance program in Japan does not provide adequate income support for the working poor and creates inherent work disincentives. In this context, the Earned Income Tax Credit (EITC) warrants consideration to strengthen the social safety net and relieve poverty of the working poor in Japan. This paper provides an overview of the theoretical and practical issues of EITC, aiming to support its potential introduction in Japan.
Keywords:
Social safety net; working poor; inequality; public assistance; in-work benefits; Earned Income Tax Credit (EITC); Japan; program in Japan; public assistance program; Japan's poverty rate; Japan's unemployment rate; EITC program; Income; Wages; Employment; Social assistance spending; Income tax systems
Cover Technical Notes and Manuals
IMF Engagement on Social Safety Net Issues in Surveillance and Program Work
International Monetary Fund. Fiscal Affairs Dept.
and
International Monetary Fund. Strategy, Policy, & Review Department
The International Monetary Fund’s engagement on social safety net (SSN) issues is likely to expand as member countries respond to growing challenges in the economic and fiscal landscape. SSNs play a crucial role in protecting households from poverty, promoting inclusive growth, and maintaining social stability. This technical note discusses (1) the different channels through which SSN spending may become macro-critical, (2) how to assess the importance of these channels, and (3) the types of policy responses that are appropriate and the trade-offs involved in choosing among them. To facilitate a more comprehensive assessment of SSN spending, the paper also examines the complementary role of labor market programs (for example, unemployment benefits and active labor market programs). The paper emphasizes the importance of early engagement and coordination with development partners with expertise on social safety nets and with different stakeholders when formulating policy advice.
Keywords:
Fiscal Policy; Social Protection; Social Safety Nets; Spending adequacy; Spending Efficiency; Fiscal Sustainability; SSN spending; labor market program; benefit incidence; SSN program; Benefit-cost ratio; Social assistance spending; Income; Labor markets; Poverty reduction; Sub-Saharan Africa; Global
Cover IMF Working Papers
Generational Aspects of Inclusive Growth
Mr. Benedicte Baduel
,
Asel Isakova
, and
Anna Ter-Martirosyan
Sharing economic benefits equitably across all segments of society includes addressing the specific challenges of different generations. At present, youth and elderly are particularly vulnerable to poverty relative to adults in their middle years. Broad-based policies should aim to foster youth integration into the labor market and ensure adequate income and health care support for the elderly. Turning to the intergenerational dimension, everyone should have the same chances in life, regardless of their family background. Policies that promote social mobility include improving access to high-quality care and education starting from a very early age, supporting lifelong learning, effective social protection schemes, and investing in infrastructure and other services to reduce spatial segregation.
Keywords:
inequality; inclusive growth; youth employment; elderly poverty; intergenerational mobility; WP; social mobility; youth labor market outcome; growth indexation; life satisfaction; wage inequality; income composition; labor market prospects; education mobility; elderly people; absolute poverty; Labor markets; Aging; Income; Global; Africa; Middle East
Cover IMF Working Papers
A European Minimum Wage: Implications for Poverty and Macroeconomic Imbalances
Ms. Enrica Detragiache
,
Mr. Christian H Ebeke
,
La-Bhus Fah Jirasavetakul
,
Koralai Kirabaeva
,
Mr. Davide Malacrino
,
Florian Misch
,
Mr. Hyun Park
, and
Ms. Yu Shi
A hypothetical European Minimum Wage (MW) set at 60 percent of each country’s median wage would reduce in-work poverty but have limited effects on overall poverty, as many poor households do not earn a wage near MW and higher unemployment, higher prices, and a loss of social insurance benefits may erode direct benefits. Turning to competitiveness, since the MW increase to reach the European standard would be larger in euro area countries with excessive external surpluses, the associated real appreciation should help curb existing imbalances. However, a few countries with already weak external positions would experience an undesirable real appreciation.
Keywords:
WP; wage-inflation pass-through; wage growth; MW harmonization; wage competitiveness; wage differentiation; pressure mechanism; wage distribution; workers range; influence wage dynamics; IMF staff calculation; current account; wage inequality; Wages; Minimum wages; Labor costs; Wage adjustments; Europe; Global; Central and Eastern Europe; Baltics; Minimum Wage; European Union; Poverty Alleviation; Current Account Rebalancing; Monetary Unions
Cover IMF Working Papers
Household Consumption Volatility and Poverty Risk: Case Studies from South Africa and Tanzania
Mr. Matthieu Bellon
,
Carlo Pizzinelli
, and
Mr. Roberto Perrelli
Economic volatility remains a fact of life in Sub Saharan Africa (SSA). Household-level shocks create large consumption fluctuations, raising the incidence of poverty. Drawing on micro-level data from South Africa and Tanzania, we examine the vulnerability to shocks across household types (e.g. by education, ethnic group, and economic activity) and we quantify the impact that reducing consumption volatility would have on aggregate poverty. We then discuss coverage of consumption insurance mechanisms, including financial access and transfers. Country characteristics crucially determine which household-level shocks are most prevalent and which consumption-smoothing mechanisms are available. In Tanzania, agricultural shocks are an important source of consumption risk as two thirds of households are involved in some level of agricultural production. For South Africa, we focus on labor market risk proxied by transitions from formal employment to informal work or unemployment. We find that access to credit, when available, and government transfers can effectively mitigate labor market shocks.
Keywords:
WP; Tanzania; consumption volatility; food consumption; consumption fluctuation; consumption deviation; consumption level; counterfactual consumption allocation; consumption loss; Consumption; Income; Household consumption; Employment; Africa; Sub-Saharan Africa; Poverty; South Africa
Cover IMF Staff Country Reports
Malta: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper assesses the marginal impact of promoting inclusive growth in Malta. The paper uses a multi-country simulation model, the IMF’s Flexible System of Global Models calibrated for Malta, is used to analyze the macroeconomic impacts of ongoing and potential future reforms. Three different policies are analyzed, namely: increasing childcare and after care benefits; extending working lives; and upskilling the labor force. The model shows that the reduction of absolute poverty has been accompanied by rising inequality. The simulation evaluates the macroeconomic impact of introducing free childcare, which is the actual government policy since 2015. Simulations show that policies that are primarily aimed at improving social inclusion also end up boosting potential output, thereby mitigating the fiscal cost of such policies in the long term. Recent declines in poverty rate can partly be ascribed to the cycle, however, recent structural reforms likely have had a significant impact on growth.
Keywords:
ISCR; CR; poverty risk; policy; refugee; pay; government policy; policy reform; childcare services policy; policy experiment; policy initiative; refugee integration scenario; Labor supply; Income; Global
Cover IMF Staff Country Reports
Islamic Republic of Mauritania: Economic Development Documents
International Monetary Fund. Middle East and Central Asia Dept.
This Economic Development Document summarizes Mauritania’s Strategy for Accelerated Growth and Shared Prosperity (SCAPP) for 2016–30. The first five-year phase of the SCAPP will complete projects under way and lay the foundations for a new, politically more peaceful Mauritania, with infrastructure put in place to support growth and encourage development of the country's natural resources. Steps will be taken to complete the reforms needed to improve the business climate and promote the private sector. In the second five-year period, the economy will be more diversified and competitive, with the real rate of growth averaging at about 10 percent a year. The third five-year phase will consolidate Mauritania's “new look” and the economic growth will exceed 12 percent a year.
Keywords:
ISCR; CR; border; private sector development strategy; public finance; Islamic Republic of Mauritania honor; natural resources; poverty rate; shared prosperity; Inclusive growth; Public investment and public-private partnerships (PPP); Human capital; Business environment; Global
Cover IMF Staff Country Reports
Israel: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes the macro-fiscal implications of an increase in infrastructure spending, considering Israel’s dual economy character. The efficiency of investment is key to ensuring growth benefits are achieved and to containing increases in the public debt ratio. Selecting projects with low rates of return, managing public investment inefficiently, or raising investment faster than absorptive capacity, can lead to weaker growth benefits and higher debt ratios that reduce the room to sustain increased public investment. Growth benefits will likely be insufficient to prevent a significant increase in debt ratios, indicating a need for revenue measures, where reductions in tax benefits are preferable. Allowing the public debt ratio to rise as much as 10 percentage points appears too high as Israel faces wider uncertainties than most advanced economies and it should also preserve fiscal space to facilitate structural reforms for long-term growth. Given Israel’s very low civilian spending, the government should consider financing most of the additional investment with additional revenues. Israel’s sizable foregone revenue from various tax benefits—around 5 percent of GDP per year—suggests significant scope for revenue gains. Our analysis also suggests that reducing tax benefits is least detrimental to growth, which in turn would be most positive for debt dynamics.
Keywords:
ISCR; CR; Haredi; employment; gender wage gap; investment growth; Haredi man; employment gap; work practice; IMF staff; infrastructure investment; high-tech sector; investment scale up; work incentive; Public investment and public-private partnerships (PPP); Public investment spending; Income; Global
Cover IMF Staff Country Reports
Burkina Faso: Economic Development Documents
International Monetary Fund. African Dept.
This paper discusses various economic development documents of Burkina Faso. Economic Development Documents are prepared by member countries in broad consultation with stakeholders and development partners. They describe countries’ macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major sources of financing. The aim of the 2016–2020 National Plan for Economic and Social Development (PNDES) is to structurally transform the Burkinabè economy to generate strong, sustainable, resilient, and inclusive growth in order to create decent jobs for all and improve social well-being. As a national benchmark, the plan aims to achieve cumulative growth of per capita income to reduce poverty and meet the population’s basic needs within a fair and sustainable social framework. During the entire PNDES implementation phase, measures will be taken to improve the quality of institutions and strengthen the governance and the availability of qualified human resources to meet the economy’s structural transformation needs.
Keywords:
ISCR; CR; PNDES; economic growth; PNDES implementation guidelines principle; population age structure; rate; PNDES strategy; PNDES implementation mechanism; PNDES document; poverty rate; human resources; PNDES result; PNDES hinge; Human capital; West Africa