Armenia - Social assistance programs and work disincentives (الأرمينية)
The Government of Armenia (GOA) has expressed concerns over the potential work disincentives effects of its social assistance programs. The most important of these programs is the Family Benefit Program (FBP). This program was established in 1999; after... انظر المزيد +
The Government of Armenia (GOA) has expressed concerns over the potential work disincentives effects of its social assistance programs. The most important of these programs is the Family Benefit Program (FBP). This program was established in 1999; after Armenia consolidated several Soviet-era categorically-targeted programs into single cash based and targeted social safety net. The program accords priority to poor and vulnerable social groups, such as the elderly, persons with disabilities, and families with children. The FBP achieves a good targeting performance, about 72 percent of the program resources go to the poor. This note aimed to respond to the GOA's request and to assess the extent of work disincentives in the FBP. The analysis herein was in part based on the findings of a World Bank mission in Armenia on November 15-22, 2010. First, the study team briefly reviewed international evidence, from both developed and developing countries, on the work disincentive impacts of similarly designed social assistance programs. Second, it compared the demographic profile of FBP beneficiaries to that of non-beneficiaries, it identified individuals who could be expected to work and appraised their labor market opportunities and outcomes. Third, it looked at the size of the FBP transfer in relation to the prevailing minimum wage, average wage, poverty line, and average consumption expenditures of Armenian households, and thereby investigated whether FBP beneficiaries could survive on the benefit alone, and whether it is possible to substitute between wage employment and the FBP. Fourth, it examined the FBP targeting mechanism in order to identify any potential, even if unintentional, negative impacts on work incentives. Fifth, it used a rigorous empirical analysis to estimate the magnitude of any potential work disincentives created by the FBP.
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