Report No. 47490-RO Romania Poverty Monitoring Analytical ...€¦ · 1. During recent years Romania made efforts to redistribute the benefits of growth by keeping constant the share

June 30, 2008

Document of the World Bank

Report No. 47490-RO

RomaniaPoverty Monitoring Analyticaland Advisory Assistance ProgramAre the Most Vulnerable Protected?

Human Development Sector UnitEurope and Central Asia Region

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CURRENCY AND EQUIVALENT UNITS

Vice President Country Director Country Manager Sector Director Sector Manager Task Team Leader

ACOVI CEM CPS ECA ESSPROS EU GDP GNI HB S HIS JIM LSMS LTS MLFEO MLSSF NIS SILC

Shigeo Katsu Or salia K a l antzopoulos Beno i t B 1 are1 Tamar Manuelyan Atinc Gordon Betcherman Cem Mete

Exchange Rate Effective June 8 2008 Currency Unit = RON (New Romanian Le i )

1 L e i = US$0.42 US$l =Lei 2.33

FISCAL YEAR January 1 - December 3 1

ACRONYMS AND ABBREVIATIONS

Romanian Living Conditions Survey Country Economic Memorandum Country Partnership Strategy Europe and Central Asia European System o f integrated Social Protection Statistics European Union Gross Domestic Product Gross National Income Household Budget Survey Integrated Household Survey Joint Inclusion Memorandum Living Standard Measurement Survey Life in Transition Survey Ministry o f Labor, Family, and Equal Opportunities Ministry o f Labor, Social Solidarity and Family National Institute o f Statistics Survey of Income and Living Conditions

Acknowledgements

This report was prepared by Cem Mete (Senior Economist, ECSHD) and Lucian Bucur Pop (Senior Social Development Specialist, ECSSD). Peer reviewers for the report were Catalin Pauna and Emil Daniel Tesliuc.

The preliminary findings o f the analyses presented here have been discussed with the staff o f the Ministry o f Labor, Family and Equal Opportunities (MLFEO) during meetings that took place in Bucharest. A training workshop was organized in parallel with preparation o f this report, titled “Poverty and social inclusion analysis workshop” and i t took place in Bucharest during November 5-10 2007, organized joint ly with the Bank and the Romanian National Institute o f Statistics and the Department o f Policies, Strategies, and Social Inclusion (DPSSI) in the MLFEO. The participants included the staff o f MLFEO, University o f Bucharest and Quality o f L i f e Research Institute. The topics that were covered through presentations and discussions included (i) various definitions o f poverty and social inclusion; (ii) data sources for poverty and social inclusion analysis; (iii) constructing the welfare aggregate and choice o f poverty lines (applied sessions focused on the use o f SPSS software for this purpose).

The Government o f Romania provided invaluable assistance during this process. In particular, the team i s grateful for the collaboration o f the M L F E O through Adina Dragotoiu (Director o f the Department o f Policies, Strategies, and Social Inclusion), Mihaela Grecu (Director, Social Assistance Rights and Social Services), Daniela Docsanescu, and Dumitru Hang (experts, General Direction o f Social Inclusion and Social Assistance).

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Table of Contents

Acknowledgements .................................................................................................................... i I Introduction ............................................................................................................... 1 I1 Overview o f the Social Protection System and i ts Overall Effectiveness ................. 3 I V Effectiveness o f the Main Social Assistance Programs .......................................... -10 I V Moving closer to the social inclusion common objectives . review of key issues .. 14

Appendix 1 . Methodological aspects of the beneft incidence analysis .............................. -17 Appendix 2 . Magnitude of the main benefts ...................................................................... 18 Appendix 3 . Main Social Assistance Benefits: Levels and Eligibility Thresholds .............. 19 Appendix 3 . Main Social Assistance Benefits: Levels and Eligibility Thresholds .............. 19 Appendix 4 . Decomposition of the Gini Index by Income Sources .................................... -20 Appendix 5 . Effectiveness of Social Protection Benefits .................................................... 22 Appendix 6 . Geographical Distribution of Poverty and Main Targeted Transfers ............. 35

List o f Figures

Figure 1 : Social Protection Spending in Selected EU Member States ............................................ 3 Figure 2 : Spending on Main Social Assistance Benefits in Selected EU Member States (2005) ... 4 Figure 3: Shares of SP Benefits in the Net Income ......................................................................... 7 Figure 4: Concentration of selected benefits in consumption, 2006 ................................................ 9 Figure 5: Performance ofthe main targeted program .................................................................... 12 Figure 6: Performance of Social Assistance (SA) Cash Transfers in Reducing the Poverty Gap 15

.. 11

List o f Tables

Table 1: Households coverage with social benefits ........................................................................ 6 Table 2: Coverage of the poor with social protection benefits .................................................... 10 Table 3: Decomposition of the Gini index by income sources, 2006 ........................................... 16

... 111

POVERTY MONITORING ANALYTICAL AND ADVISORY ASSISTANCE PROGRAM: Are the Most Vulnerable Protected?

I Introduction

The rapid economic growth since 2000 has been the main driver o f poverty reduction in Romania. However, even under the current positive growth scenario, there are s t i l l people who live in poverty, and some who are unlikely to benefit from future growth and thus may continue to be le f t behind'. For these people an effective redistributive social policy and targeted interventions are needed. The purpose o f this note i s to assist the Ministry o f Labor, Family and Equal Opportunities (MLFEO) to analyze and monitor the effectiveness o f the main social safety net benefits to fight social exclusion and reduce poverty.

To determine the extent to which social transfers offer protection to the poorest groups o f the population, the paper uses the last available (2004-2006) rounds o f the Household Budget Survey data. The analysis presented here uses the consumption aggregate and the absolute poverty definition presented in the 2003 and 2007 Poverty Assessments2. Three main indicators are used to assess the effectiveness o f social protection (SP) programs3: coverage (share o f population covered by the programs), targeting (share o f funds directed to each welfare group o f population), and adequacy o f benefit (share o f the benefit in the consumption o f beneficiaries4).

The paper begins with a review o f the main findings, followed by an overview o f the social protection system and i t s overall effectiveness. Then i t assesses the main social assistance programs, and concludes with a review o f key issues.

' Under the scenario o f a 5-6 percent growth per annum, the absolute poverty would be reduced from 13.8 percent in 2006 to 6-7 percent in 2010, meaning that over one million people wi l l still live below the absolute poverty line (World Bank, 2007). ' The poverty measurement methodology was elaborated jointly by the Romania Anti-Poverty Commission, the National Institute o f Statistics, and the World Bank, in 2002.

For additional details on the methodology, see Annex 1. The survey data analysis wi l l consider both direct and indirect beneficiaries (i.e., all the members of a

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household receiving a benefit).

1

Main Findings

0 Romania made efforts to redistribute the benefits o f economic growth by keeping constant the share o f GDP devoted to social protection benefits, but only a small share o f this redistribution reached the poor. At the same time, the “spillover” (share o f funds going to the non-poor) o f the social assistance cash transfers increased, and their performance in covering the poverty gap weakened.

The social protection system provides extensive coverage in terms o f number o f beneficiaries, but some o f the most vulnerable groups, such as poor farmers and poor fami l ies with children are not adequately protected.

The mix o f targetedhon-targeted programs is relatively good (when compared with the average EU27), but the spending on targeted benefits i s decreasing in relative terms (as share in GDP). As a consequence, the targeted benefits have l o w coverage o f the poor (a significant proportion o f poor are not reached by these benefits, leading to exclusion errors) and low adequacy (the level o f benefits i s low, leading to inadequate protection against income vulnerability).

The Guaranteed Minimum Income i s performing well (one o f the best in the region). Despite an absolute poverty rate o f 13.8 percent and a relative poverty rate o f 18.6 percent in 2006, pointing to the need to sustain the program, there is evidence that the program’s funding i s actually shrinking.

As the economic growth wil l continue to lift out o f poverty a part o f the existing poor, the remaining ones will constitute real “poverty pockets”. A shift in emphasis towards targeted programs should be considered to fight long-term, chronic poverty.

2

I1 Overview o f the Social Protection System and i t s Overal l Effectiveness

1. During recent years Romania made efforts to redistribute the benefits of growth by keeping constant the share of GDP devoted to social protection; still, the social protection expenditure per capita is the lowest in Europe. Romania redistributes about 10 percent o f GDP via social protection programs. During 2004-2007, the share o f social protection transfers in GDP was remarkably stable, but relatively l o w when compared with other new EU members. In absolute terms, Romania has the lowest expenditure per capita on social protection', and much higher spending in the future does not seem very likely6, considering the increasing pressure to maintain a l o w budget deficit. At the same time, the system has one o f the lowest shares o f administration costs in total SP expenditure, o f only 1.4 percent, compared with the EU average o f 2.9 percent.

Figure 1: Social Protection Spending in Selected EU Member States Source ESSPROS, 2008

Social Protection Spending In Selected EU Member States

-- I"- T 120 0 6

100 20 0 -

D- v)

YI 80 f

3 ?

100 E

P 150

0

c 60 f

j L m

I

5 0 E

40 f n p

20 a k! 8

0 0 0

2. The social protection (SP) system in Romania, as in the other countries in the region, comprises two pillars: (i) social insurance (contributory benefits) and (ii) social assistance (non-contributory benefits). The social insurance benefits consist mainly o f pensions' for

In Purchasing Parity Standards (Social protection in the European Union, Eurostat, 2008) An increase in social protection spending o f about 1.5 percent of GDP i s expected on the pensions side,

The pensions system i s a classical Pay As You Go scheme. This section will cover the topic of pensions only

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following the introduction of the second pillar and the recent pensions increases.

in relation with incomes vulnerability.

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former employees or farmers’ (for o ld age and disability) and their dependents (survivors), and unemployment benefits. The unemployment benefit i s set at 75 percent o f the minimum gross wage and i s granted for a period o f 6 to 12 months depending on the length o f service. In addition, school graduates unable to find employment are entitled for a period o f 6 months to an allowance o f 50 percent o f the minimum gross wage. During recent years the spending on these transfers (pensions and unemployment) reached on average about 5.8 percent o f the GDP, resulting in a relatively l o w adequacy o f benefits by the region’s standards’, but at the same time avoiding potential disincentives to work (in the case o f unemployment benefit) and sustainability challenges to the public pensions scheme.

3. The social assistance system includes a number o f cash and in-kind benefits, and services. B y and large, the social assistance cash benefits system in Romania comprises five main pillars: (i) children and family, (ii) disability and illness (not analyzed in this report), (iii) housing utilities (Le., heating allowances), (iv) last resort income support (Le., Guaranteed Minimum Income - GMI), and (v) “merit-based” benefits (Le., allowances for war veterans, for heroes, etc.). In absolute terms, the expenditure on the main social assistance benefits i s amongst the lowest in EU, while as share in GDP it reflects l o w effort compared with the magnitude o f poverty.

Figure 2: Spending on Main Social Assistance Benefits in Selected EU Member States (2005) Source: ESSPROS 2008 for social assistance spending, World Bank staff estimates for poverty

Spending on Main Social Assistance Benefits in Selected EU Member States (2005)

3

2 5

E

: ; 2 e!

1 5

1

0 5

0 Bulgana Estonia Hungary Lithuanie Lahla Poland Romania Slovenia EU27

50

45

‘O c 35

N

30 2 Y

!?

20 ; 25 ; ::

E 15 P 10 H 5

0

4. Compared with the EU average, Romania has a good mix of targetednon-targeted social assistance programs, but the relatively high number of programs, the low adequacy,

The farmer pensions are currently paid out o f the state budget The ratio average pension-average wage i s about 0.6 in EU, on average, compared with 0.4 in Romania (see

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9

Appendix 2)

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and the heterogeneity of the eligibility thresholds/ criteria of different benefits translate into a rather fragmented and difficult to monitor system of social assistance benefits. The total number o f social assistance benefits i s rather high (over 3 9 , comprising a m i x o f categorical, income/means-tested (targeted”), and “merit” based schemes. Although significant steps towards consolidation (including the piloting o f the Unique Payment Agency), and towards a “L i fe course framework” approach were made, the system s t i l l has to be improved. Most o f the social assistance benefits have a l ow adequacy, representing 10-20 percent o f the minimum wage (see Appendix 2). The l o w benefit levels together with the system fragmentation are probably increasing self-targeting, but also increase the transaction costs (including information, time spent to apply, etc.) for the poor.

5. The share o f targeted benefits in the total expenditure on non-contributory benefits represents more than 25 percent, which may seem low, but i s higher than the EU27 average (20 percent in 2005). Although there i s no legislation regulating the link between the eligibility thresholds for the targeted (income/ means tested) benefits and the minimum wage, there i s evidence that for each program the thresholds were kept relatively constant, but the levels o f these thresholds differ from one program to the other. Thus, in the case o f family benefits the threshold was stable over the years at 50 percent o f the minimum wage per capita, and in the case o f the heating subsidies at a maximum 90 percent, respectively. In the case o f Guaranteed Minimum Income (GMI), the threshold is much lower, below 30 percent o f the minimum wage per household member, and in 2007 i t s level relative to the minimum wage decreased.

6. Overall, Romania’s social protection system continues to have an extensive coverage, reaching directly or indirectly about 85 percent of the population, and covering about a quarter of an average household’s net income. The Household Budget Survey data shows that, in 2006”, 82 percent o f the households (meaning 85 percent o f individuals) received at least one social protection benefit, ha l f o f them receiving two or more benefits. The share o f SP beneficiaries i s significantly higher in rural than in urban areas (88 percent, respectively 78 percent) mainly due to the farmer pensions, which are specific to rural areas. The benefits with the highest coverage are pensions, in particular the old-age pension (4 1 percent), family allowances (38 percent), in particular the chi ld allowance (37 percent), and social benefits in kind (20 percent).

Through the section we refer to income/means tested benefits as “targeted benefits”. The categorical targeted

The last available survey wave

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benefits will be referred to as “categorical benefits”. II

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Table 1: Households coverage with social benefits

2004 Urban Rural Total

49.8% 62.6% 55.4% contributory social protection hpnpfitr

old age pension 35.0% 32.4% 33.9% disability pension 9.9% 8.3% 9.2% survivor pension 4.6% 11.3% 7.6% social assistance pension 0.4% 0.4% 0.4% farmer pension 1.5% 28.5% 13.4%

0.2% 0.8% 0.4%

unemployment benefits 4.0% 2.2% 3.2% redundancy payments 0.8% 0.2% 0.5%

52.3% 51.0% 51.7%

war veterans (including survivor) pension

noncontributory social protection benefits family allowances

child allowance income-tested family

child care leave'/ child raising allowances

benefit allowances for disabled Guaranteed Minimum lncome housing utilities allowances scholarships allowances for war veterans allowances for subjects of political persecution allowances for heroes, martyrs and their heirs in kind social benefits

subsidired medicines bread and milk in school other in kind social benejts

other social assistance

40.0% 39.8%

1.8%

2.0%

I .6% 1.3% 6.4% 0.8% I .8%

0.7%

0.0%

18.6% 7.6% 7.5% 5.9% 0.4%

38.4% 38.2%

8.0%

0.9%

3.1% 6.6% 1.6% 0.6% 5 2%

0.5%

0.0%

17.3% 3.6% 11.0% 4.0% I .3%

39.3% 39. I %

4.5%

1.5%

2.3% 3.7% 4.3% 0.7% 3.3%

0.6%

0.0%

18,0% 5.8% 9.0% 5.1% 0.8%

any social protection benefits 80.1% 89.1% 84.1%


49.5% 61.1% 54.5%

34.2% 1 1 .O% 4.4% 0.3% 1.7%

0.2%

3.0% 0.7%

32.2% 8.5% 11.1% 0.6%

26.4%

0.4%

2.0% 0.2%

33.4% 9.9% 7.3% 0.4% 12.5%

0.3%

2.6% 0.5%

52.5% 50.5% 51.6%

39.0% 38.8%

2.7%

2.6%

2.1% 1.3% 7.4% 0.8% 1.5%

0.5%

0.0%

19.7% 8.9% 7.2% 6.6% 0.4%

38.2% 38. I %

13.1%

1.2%

3.0% 6.6% 2.2% 0.5% 4.2%

0.5%

0.0%

18.4% 3.6% 11.7% 4.7% 0.9%

38.7% 38.5%

7.2%

2.0%

2.5% 3.6% 5.1% 0.7% 2.7%

0.5%

0.0%

19.1% 6.6% 9.2% 5.8% 0.6%

79.3% 88.4% 83.3%


41.8% 60.3% 53.2%

34.0% 10.3% 4.4% 0.2% 1.3%

0.1%

2.0% 0.3%

3 I .O% 8.3% 10.7% 0.4%

25.7%

0.3%

1.8% 0.2%

32.7% 9.4% 7.1% 0.3% 11.9%

0.2%

1.9% 0.3%

52.3% 50.2% 51.4%

37.4% 37.1%

2.0%

3.2%

2.0% 1.2% 7.9% 0.7% 1.3%

0.6%

0.0%

2 I .3% 11.0% 6.7% 6.9% 0.2%

37.9% 37.7%

11.7%

1.8%

3.3% 6.2% 3.0% 0.6% 3.4%

0.5%

0.0%

18.7% 4.7% 11.5% 4.1% 0.6%

37.6% 3 7.3%

6.2%

2.6%

2.6% 3.3% 5.8% 0.7% 2.2%

0.6%

0.0%

20.2% 8.3% 8.8% 5.7% 0.4%

17.7% 87.5% 81.9%

* paid from the social insurance fund until 2006 Source: Romania Household Budget Surveys, authors' calculations,

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7. As compared with 2004, 2006 registered a slight decrease in the coverage o f social benefits, mainly due to the decrease in coverage o f contributory benefits. However, the survey data shows that the coverage provided by the system remained generally stable, with small fluctuations o f 1 to 2 percentage points. A relatively stable trend i s also observed with respect to the share o f social benefits in the average household’s income. The pensions’ share in the households’ income remained at an average o f about 19 percent, while the other social transfers recorded a slight increase, more visible in the rural areas, due to a decrease in the share o f self-produced food (which has decreased with about 4 percentage points since 2004, being replaced by cash income from employment and social protection). The non- contributory benefits have a share o f almost 7 percent o f the total population’s net incomeI2, the most important transfers being the family benefits (3.3 percent) and the in kind benefits (1.5 percent).

Figure 3: Shares of SP Benefits in the Net Income Source: Romania Household Budget Surveys, authors’ calculations

Shares of SP benefits in the net income

&I non-agncultural selfemploymeni mcash income from agnculture 0 other social transfers VI in kind income from agnculture mpensions

Urban Urban Urban Rural Rural Rural Total Total Total 1 2004 I 2005 1 2006 I 2004 ~ 2005 1 ZOO6 I 2004 ~ 2005 ~ 2006 ~

8. The overall system of social protection benefits has good coverage of the poor, but some of the most vulnerable groups are less likely than others to be covered by adequate benefits. The social protection benefits (contributory and non-contributory) cover almost 90 percent o f the poorest decile” (Table A5.1), 100 percent o f the poor pensioners, and almost al l poor families with children and elder households. Rural households are slightly better covered than urban households, although poor farmers, one o f the most vulnerable categories identified by the 2007 Poverty Assessment, are the least covered (83 percent). Roma households, another category identified as having a very high risk o f poverty, are well covered (90 percent). The adequacy o f the SP benefits taken together i s relatively good,

l 2 The figures presented in this paragraph are computed as national “averages” (for an average household), and not only for beneficiaries. The estimations represent the share of total benefits in total population incomes.

The poorest I O percent of population 13

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ensuring on average 50 percent o f the consumption o f poorest beneficiaries. In the case o f poor elderly and pensioners, the share goes up to 70 percent, while for the unemployed, poor farmers, poor families with children, and Roma households it represents only about one third. Compared with 2004, the adequacy o f benefits increased for pensioners and decreased slightly or remained constant for most o f the poor. As expected, only 12 percent o f the total social protection spending reaches the f i rs t q~ int i le '~ , while hal f o f the funds go to the fourth and fifth quintile, due to the large share o f pensions in the total social protection benefits. The poorest decile o f population gets only about 5 percent o f the total SP funds, while poor farmers get 1 percent and poor families with children get 3 percent.

9. The pensions have a good coverage of the poor elderly, but this type of social protection is likely to decrease in rural areas according to the trend in the number of farmer pension beneficiaries. The social insurance pensions cover directly or indirectly (through beneficiary household members) 41 percent o f the total population, and 61 percent o f the poor elderly (Table A5.2). Because o f their link with previous contributions from wages, more than hal f o f the social insurance pension benefits go to the wealthiest quintiles (fourth and fifth), while only 9 percent o f the pension benefits reach the low-income quintile. However, social insurance pensions offer a good protection to the poorest beneficiaries, by covering on average 60 percent o f their consumption.

10. Compared with the social insurance pensions for the former employees, the farmer pensions have lower coverage (1 1 percent o f population, respectively 5 1 percent o f poor elderly) and adequacy (20 percent o f beneficiaries' consumption, and less than 40 percent in the case of poor) but are more progressive (60 percent o f the funds reaching the poorer, f i rs t and second, quintiles). Farmer pensions cover about 20 percent o f the rural poor, and one third o f their consumption. However, the number o f beneficiaries decreased tremendously as compared to 2004 (Appendix 2), and it i s likely that in the near future the (poor) elderly coming from the agriculture sector be left without any protection against income vulnerabilities associated with aging (Le,, because most o f the current individual farmers are not contributing to pension fund). 11. The total social safety net benefit^'^ are not progressive, and offer only a modest protection to the poor against income vulnerability. One would expect that the benefits other than pensions (Le., unemployment and social assistance benefits), taken together, would be more progressivelyi6 distributed. The 2006 survey data contradict this expectation, showing that, overall, these benefits cover about 70 percent o f the poorest population (Table A5.4), but only 17 percent o f their funds reach the poorest quintile, while hal f o f the funds go to the rich quintiles. This happens mostly because o f the non-targeted family benefits and in- kind social assistance benefits. The graphic representation o f the concentration curves shows that the means/ income-tested benefits l ie above the equality l ine (diagonal), meaning that most o f their funds go to the poorer segments o f population, while the in-kind benefits curve lies below the diagonal, meaning that a higher share o f these benefits go to non-poor. The non-targeted family benefits curve i s close to the equality line, meaning that these benefits are distributed relatively even between different income groups, and the same situation can be observed for the total social safety net benefits.

The poorest 25 percent of population 14

Is We refer to the total social safety net as being composed o f social assistance and unemployment benefits. l6 A progressive benefit i s a benefit that has a higher share o f funds transferred to the poor than to non-poor

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Figure 4: Concentration of selected benefits in consumption, 2006 Source: Romania Household Budget Survey, authors' calculations

Concentration of selected benefits

P

N

0

0 .2 .4 .6 1 Percentiles (p)

45' line GMI and targeted family benefits in kind social benefits

other benefits than pensions

non-targeted family allowances

12. Together, the unemployment and social assistance benefits provide a relatively good coverage o f the vulnerable population, especially to the poor families with children (98 percent) and Roma (84 percent), but a modest protection against income vulnerability, the share o f consumption covered by these benefits being less than 30 percent for the poorest beneficiaries. The social safety net succeeds to get out o f poverty about 20 percent o f the pre- transfer poor'7, and to reduce the (pre-transfer) poverty gap b y 24 percent, but at a very high cost: 13 RON spent for each 1 RON reduction in the poverty gap (not taking into account the administrative costs).

Those being poor before receiving the benefit 17

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Table 2: Coverage of the poor with social protection benefits Source: Romania Household Budget Surveys, authors’ calculations

2004 2005 2006 any type o f benefits

no benefit 9 9 11 one benefit 31 28 31 multiple benefits

contributory benefits

61 62 58 multiple benefits

contributory benefits

61 62 58

no benefit 53 55 59 one benefit 36 34 32 multiple benefits 12 11 10

non-contributory benefits no benefit 27 26 29 one benefit 33 28 28

40 46 44 multiple benefits

13. After all transfers, the poor are better covered than the non-poor, but 11 percent of them are practically excluded from the system. Moreover, a high share (29 percent) of the poor is not reached by any social assistance (non-contributory) benefits. Together, the main benefits targeting the poor (the last resort income support and the income-tested family allowances) leave out 60 percent o f the rural poor and 77 percent o f the urban poor respectively. Even if their coverage and targeting performance seem to improve over the last 3 years, their adequacy i s decreasing, making them less effective in protecting the poor against income vulnerability.

I V Effectiveness o f the M a i n Social Assistance Programs

14. The Guaranteed Minimum Income (GMI) is well targeted, but suffers from low coverage of the poor, due in large part to limited funding. The GMI (0.1 percent o f GDP in 2007, down from 0.2 percent in 2004) i s a last resort income support scheme, being a m i x between Verified Means Test (VMT) and Self-Targeting (ST). The benefit level i s a differential one, being calculated against a threshold established function o f family size. The family i s thus entitled to social assistance equal to the difference between the GMI threshold and their actual income from al l other sources, including the imputed income from assets such as land and animals. The existence o f a working member increases the benefit entitlement by 15 percent. The eligibility threshold incorporates a relatively flat equivalence scale and i s indexed on a yearly basis (see Appendix 3). The scheme assumes a two t ier testing system: an administrative bureaucratic testing o f personal income, based on self- reported income statements (including imputed income from assets such as land and animals), and a verification o f means procedure, based on social inquiries at the claimant’s domicile (VMT). In addition, the scheme includes a community work requirement for those

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able to work (ST). A family i s entitled to receive GMI as long as i t satisfies the legal requirementdcriteria. The program i s administered by local government units and eligibility i s determined at the municipal level according to criteria defined by the methodological norms issued by the Ministry o f Labor, Family and Equal Opportunities (MLFEO). By 2006 the criteria were defined at a relatively general level and the local governments were responsible for determining the imputed income from land and other assets. In 2005, following a joint evaluation o f the program done in 2003 by the MLFEO, DFID and World Bank, the legislation was improved, ensuring, amongst other things, more horizontal equity with respect to the income imputation procedures. The GMI funding i s provided to the local government units from the State Budget, through the County Councils. Thus, the funds allocation between localities i s done at the sub-national level.

15. The GMI succeeds to transfer 45 percent o f i t s funds to the poorest 10 percent o f Romanians, having the best targeting performance o f the Romania social safety net programs. Relative to the performance o f similar programs in the neighboring countries, it has a high coverage (1 6 percent o f the poorest quintile, respectively 22 percent o f the poorest decile), a moderate adequacy (30 percent o f the consumption o f poor beneficiaries), and good targeting (66 percent o f funds to the poorest quintile). The program reaches mostly the rural poor (especially poor farmers) and poor large households (especially poor families with children), and covers almost one third o f their consumption. Despite the (by design) discretion o f the local governments to introduce additional eligibility criteria, and o f the county councils with respect to funds allocation between local governments, the program does not seem to be significantly affected by horizontal inequities (i-e., households with similar poverty status located in different regions, and having different probabilities o f entitlement). Even before the legislative/ procedural adjustments in 2005, the territorial distribution o f the program participation correlated well with poverty in most o f the counties (see map in Appendix 6). The currently available data do not allow for a detailed updated analysis o f the geographical distribution, but by and large the program participation and funds allocation seem to be well correlated with the geo raphic distribution o f poverty. Although the scheme also suffers from inclusion errors , more concerning i s i t s low coverage, which points to significant exclusion error^'^ (Le., more than 75 percent o f the poorest decile do not participate in the program). Overall, the program i s taking out o f poverty only 3 percent o f the number o f pre-transfer poor, but reduces the poverty gap by 9 percent with a very low cost compared with other programs: 3 RON for each 1 RON reduction o f the poverty gap (not taking into account the administrative costs2').

I!

Meaning non-poor households/ individuals that are included in the program and receive the benefit. Meaning poor households/ individuals that are not participating to the program (are excluded from receiving

the benefit) 2o The administrative costs o f GMI were estimated at about 11% of the cash transfers in 2005, being borne in proportion o f 97% by the local governments (ECA Targeting Performance, WB, Romania case study).

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19

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Figure 5: Performance of the main targeted program

Source. Household Budget Surveys, authors ’ calculations

o 2 4 0 8 IO 12 i 4 la coverage of the 1st qutntrts

16. Relative to the considerable spending effort on family allowances, their performance in reducing poverty is weak. The family allowances represent the most important type o f benefits (both in terms o f spending and coverage), comprising four main programs (complemented by other, smaller, schemes): a) the “universal” chi ld allowance for children up to 18 years old, which was until recently a conditional cash transfer, the conditionality (school participation) being removed in 2007; b) the complementary family allowance, which i s an income tested allowance for families with children introduced in 2004; c) the single parent allowance, also income-tested, introduced in 2004; and d) the child-raising allowance, formerly called “child care leave” and paid f rom the social insurance fund only for employee mothers with children under 2 years old; the program was transferred in 2006 to the state budget, and transformed into a Beveridge type scheme (flat, not linked to contribution), and in 2007 was split into two allowances: a “universal” benefit paid to al l mothers (both employees and non-employees) until the chi ld reach the age o f 2 (the child allowance for children under 2), and a benefit for employee mothers (child raising allowance). All allowances are indexed on a yearly basis (see Appendix 3), and consist o f fixed amounts per children in the case o f universal chi ld allowances, or variable amounts taking into account the number o f children (Le., using an implici t equivalence scale) in the case o f targeted family benefits. The spending on these benefits amounted to 1 percent o f GDP in 2007, the highest share going to the “universal” chi ld allowance (0.5 percent of GDP), followed by the chi ld raising allowances (about 0.4 percent o f GDP) and income- tested family benefits (0.1 percent o f GDP).

17. Although the primary objective o f the non-targeted family benefits (child allowance and child raising benefit) is not necessarily poverty reduction, they are clearly part o f the policy m i x aimed at addressing the manifold dimensions o f children vulnerability and poverty. Relative to the considerable spending effort (1 percent o f GDP) on these benefits, their performance in reducing poverty i s weak. Despite their very good coverage (97 percent

12

o f poor families with children) their adequacy i s low (1 1 percent in the case o f poor families with children), and most o f their funds are going to households that would not become poor in the absence o f transfers (53 percent o f funds to the fourth and fifth quintiles). As opposed to the targeted family benefits, most o f the funds o f the non-targeted ones reach the urban population (62 percent) probably due to the link o f the child raising allowance to employment. Without the “universal” child allowances, the number o f poor would increase by 7 percent (one percentage point increase o f the poverty rate), and the poverty gap by 9 percent, but this result i s achieved with a high cost: 17 RON spent (without administrative costs) for a reduction o f the poverty gap o f 1 RON.

18. As in the case o f the GMI, the income-tested family allowances have a pro-poor distribution, but their performance i s lower with respect to both targeting (24 percent o f funds transferred to the poorest decile) and adequacy (the transfers cover on average 9 percent o f the poor beneficiaries’ consumption). The lower targeting performance (and consequently higher inclusion errors) relative to the GMI i s explained by the more generous eligibility threshold, but also by the absence o f the self-targeting mechanism.2’ The benefits reach 22 percent o f the total number o f families with children and 43 percent o f poor families with children. However, their performance in protecting against income vulnerability i s very low: their share in the consumption o f the beneficiary poor families with children i s only 8 percent.

19. The heating allowances program is affected by both exclusion and inclusion errors. The heating allowances (0.2 percent o f GDP in 2007) are the second benefit in terms o f coverage, being an income tested benefit granted for a period o f maximum 5 months during the cold season (November to March). By 2007 the scheme was inequitable, using “double standards”: those utilizing wood or coal for heating (mostly rural population) had access according to a more restrictive income threshold (only if they were beneficiaries o f the Guaranteed Minimum Income) than those using natural gas or district heating. In 2007 this inequity was remedied by introducing a unique threshold for any type o f heating allowances22. Until 2007 the heating allowances were paid as fixed amounts, function o f the households’ income per capita (different levels o f the benefit function o f the category o f incomes) and type o f heating system. Starting with 2007 the benefit level for the district heating allowance i s correlated with energy consumption (see Appendix 3 for details).

20. As mentioned above, until 2007 the heating allowances were addressed mostly to the urban population (because o f the different eligibility criteria used for different types o f heating systems). The 2006 survey data confirms this urban “bias” o f the program, showing that almost 75 percent o f the funds were distributed in urban areas, and reached mostly the middle income groups, especially employees and pensioners. Given i t s objectives (protecting the vulnerable population against steep increases in the price o f heating and against seasonal increases in the cost o f housing utilities) the program has a good adequacy, especially in the case o f the poor (covering 15 percent o f the poor beneficiaries’ consumption). However, i ts coverage i s low for the poor: according to the Household Budget Survey data only 10 percent

*’ In addition, there i s anecdotic evidence that the verification o f the incomes in the case o f family allowances i s not so rigorously implemented and enforced.

Although, given the difference in regional prices and the high share o f in kind incomes in rural areas, one would expect this solution to create some inclusion errors. 22

13

o f urban poor participated to the program in 2006. At the same time, the urban poor report in proportion o f 40 percent not being able to cope with heating expenses.

2 1. The in-kind benefits taken together are strongly regressive. In addition to the main types o f cash benefits described above, the non-contributory benefits also comprise in-kind social benefits (Le., school meals - the “bread and milk” program -, subsidies for transportation, etc.), reviewed only briefly in this paper, with focus on two them: (i) school meals, which i s a program aiming to provide a meal to every pupil attending primary education (grades 1 -4), and (ii) medication subsidies.

22. The aggregate impact o f the in kind benefits i s strongly regressive, 75 percent o f the funds being transferred to the rich quintiles. The survey data show that this type o f transfers has a strong urban “bias” too, with almost 80 percent o f funds going to the urban population. The main in kind transfers captured by the Household Budget Surveys are the subsidies for medicines, the school meals (the “bread and milk” program), and several other types o f subsidies (transportation, etc.), o f smaller magnitude, for specific categories o f population. Overall, in 2006 the in kind benefits have reached 24 percent o f the population, and cover 7 percent o f the beneficiaries’ consumption. The poorest decile o f the population i s covered to the same extent (23 percent) but gets only 3 percent o f the total funds spent.

23. The medicines subsidies have an even worse performance, reaching only 2 percent o f the poorest, to whom 1 percent o f the total funds are transferred. The survey data reveal that the main beneficiaries o f this program are the pensioners and the elderly but not the poor ones. At the same time the program has an uneven regional distribution, with most o f i t s funds going to Bucharest and the Southern region and in particular to urban areas. By contrast, the school meals program, although not a targeted one, covers about 35 percent o f the poor families with children, and transfers most o f i t s funds to the poorer regions (Table A5.13).

I V Moving closer to the social inclusion common objectives - review o f key issues

24. The “spillover” of the social assistance cash transfers increased, and their performance in covering the poverty gap weakened. Romania has an extensive system o f social protection benefits, with relatively good performance in protecting the poor. Sti l l , some o f the poor are excluded from any type o f social transfers. Moreover, some o f the most vulnerable groups, poor farmers and poor families with children, are less l ikely to be covered than others with adequate benefits. Over the past years Romania has made efforts to redistribute the benefits o f growth by keeping constant the share o f GDP devoted to social protection. However, most o f these efforts were directed towards programs that only marginally benefit the poor, and as a result the “spillover” o f social assistance cash transfers increased, and their Performance in covering the poverty gap weakened.23

23 We are not suggesting that al l social assistance programs should have poverty reduction as their primary explicit objective. Some o f these programs aim to support categories o f population considered by society as deserving assistance based on the solidarity principle (e.g., families with children), or being in need for assistance to prevent social exclusion (e.g., the disabled). However, the data i s showing that the schemes targeting the poor are crowded out by other types o f benefits which do not answer the problem o f poverty risk, which i s one o f the multiple dimensions o f social exclusion.

14

Figure 6: Performance of Social Assistance (SA) Cash Transfers in Reducing the Poverty Gap Source: Romania Household Budget Suwrys, authors' calculations

Performance of Social Asststance (SA) cash transfers in reducing the Poverty Gap

1

Total SA spending

2004 2005 2006

1 E8 Social Assistance cash transfers spillover H Poverty Gap after transfers 0 Portion of the Poverty Gap covered by social assistance cash transfers ' --I I- - ~- -- "..,

25. The total cash non-contributory benefits are rather neutral to income inequality. The picture does not look much better from the inequality perspective either. Despite the high progressivity o f the targeted benefits, as indicated by their concentration coefficients (Table 3), the total cash non-contributory benefits are rather neutral to income inequality: the meansiincome-tested benefits together with the allowances for the disabled reduce the income inequality by about 1.4 percent, but their effect i s counterbalanced by the other cash non-contributory benefits. When including the in-kind benefits, the overall distributive impact o f the social assistance transfers i s rather slightly regressive. As shown in Table 3, the major factor in reducing income inequality are the taxes, which contribute about 24 percent to inequality reduction (down from 25 percent in 2004, before the income tax reform - see Appendix 4).

15

Table 3: Decomposition o f the Gini index by income sources, 2006

Income Concentration Absolute Relative share index contribution contribution

gross wages 0.6308 0.4875 0.3075 0.9 184 gross income from agriculture 0.1778 0.1034 0.0184 0.0549

0.0382 0.2486 gross income from self-employment, non- agriculture gross pensions unemployment benefits targeted family benefits other family benefits disability allowances Guaranteed Minimum Income housing utilities allowances school meals other in kind social assistance other social transfers gross income from capital other income

0.1919 0.0062 0.0024 0.0303 0.0040 0.0045 0.0019 0.0016 0.0 134 0.0037 0.0050 0.0394

0.2640 0.0500 -0.5845 0.0978 -0.0337 -0.6592 -0.0873 -0.2586 0.5969 0.3 154 0.7614 0.4533

0.0095

0.0507 0.0003 -0.0014 0.0030 -0.0001 -0.0030 -0.0002 -0.0004 0.0080 0.0012 0.0038 0.0178

0.0284

0.1513 0.0009

0.0089 -0.0004 -0.0088 -0.0005 -0.0012 0.0239 0.0034 0.01 14 0.0533

-0.0042

taxes and contributions -0.15 10 0.53 14 -0.0803 -0.2397 1 .oooo Total 1 .oooo 0.3349

Source: Romania Household Budget Survey, authors’ calculations

26. The spending on targeted programs decreased relative to GDP and so did the adequacy of these benefits. Restoring the spending on anti-poverty programs, and increasing the access o f the poor to social protection by expanding the well performing programs (e.g., GMI) and/ or adjusting the ones that are not performing so well, would help Romania to move closer to the first common objective for social protection and social inclusion24.

27. Increasing the coverage of targeted programs by restoring their funding could help preventing further income shocks for the poorest, triggered by the ongoing food and energy price hikes. Although Romania i s not significantly exposed to the current food price crisis, i t i s likely that the urban poor are to some degree exposed to the increases in food prices, and at the same time they are very exposed to the hikes in energy prices.

28. Improved monitoring and evaluation of the social protection programs is needed. As the economic growth wi l l continue to lift out o f poverty a part o f the existing poor, the remaining ones w i l l constitute real “poverty pockets”, difficult to identify and reach in the absence o f a strengthened monitoring and evaluation system. As poverty in Romania i s shallow, further reJinements of the targetedprograms are likely to be needed to ensure a good outreach of the poor. The Social Observatory, if carefully designed and implemented following the best practices in the EU countries, would most likely represent the most appropriate approach to address the current monitoring and evaluation gaps.

24 Le., “open social cohesion, equality between men and women and equal opportunities for al l through adequate, accessible, financially sustainable, adaptable and efficient social protection systems and social inclusion policies” (EU Method o f co-ordination for social protection and social inclusion).

16

APPENDIX 1. kfETHODOLOGICAL ASPECTS OF THE BENEFIT INCIDENCE ANALYSIS

In view o f assessing the incidence o f pension benefits, the population i s ranked into quintileddeciles based on the consumption aggregate. In the case o f other social protection programs, since one o f their implici t objectives i s to offer temporary protection against poverty risk (related to temporary loss o f income, change in household structure, etc.), the ideal approach would be to identify the welfare status o f a household in the absence o f the government intervention and then to rank the individuals/ households on the base o f this counterfactual welfare indicator. To obtain unbiased estimates o f benefit incidence, one would compute a counterfactual consumption by subtracting the program benefits, and then adding the replacement income that the households would generate through their behavioral responses in the absence o f the intervention. A series o f studies2’ seems to suggest that in several countries the share o f the replacement income would be around 50 percent o f the value o f the transfer. We tested the hypothesis o f a 50 percent replacement o f income for the (categorical) family benefits in Romania, using a panel data for 2001 and 2003, and found the hypothesis acceptable26. Thus, for the non-pension benefits, in this section we assume a replacement income o f 50 percent, and rank households based on the household consumption minus 50 percent o f the transfers. While this estimate i s not precise, the results presented are robust to the choice o f a different share for the re lacement income, especially for transfers that are small compared to household consumption ,

P7

25 Ravallion (2000), van de Walle (2001; 2002) Using the following specification (van de Walle 2003): AC = a + P*AT + y*AX + A& (where C- consumption, T

- transfer, X - household size, number of earners in the household, and average age of adults). The estimated confidence interval for b was [0.4 - 1.31.

*’ See also the 2003 Romania Poverty Assessment.

26

17

APPENDIX 2. MAGNITUDE O F THE MAIN BENEFITS

Number of beneficiaries (thousan&)

Table A2.1. Magnitude of the main social insurance benefits

Average benefit to the average net wage'

Number of beneficiaries (thousands persons or families,

depending on benefit type) 2004 2005 2006 2007

Former employees pension, total Old age pension Disabilip pension Survivors pension

Farmers pension Unemployment benefits

Average monthly benefit relative to the minimum wage"

2004 2005 2006 2007

2004 2005 2006 2007 4,597 4,611 4,633 4,643 3,052 3,036 3,028 3,038 785 823 860 877 642 627 614 601

1,473 1,292 1,005 932 225 215 179 129

Child allowance Child allowance for children less than 2 y o Child-raising allowance' Complementary family allowance support allowance for single parent families Allowances for disabled (including personal assistants) District heating allowance Natural gas heating allowance Wood, coal, heating allowance Guaranteed Minimum Income (GMI)

for reference

4,228 4,409 4,271 3,824 0 1 0 1 0 1 0 I 385 0 5 183 1 5

741 735 660 550 0 1 0 1 0 I 0 1 240 250 250 210 0 2 0 2 0 2 0 2

424 467 445 0 4 0 4 0 4 0 4 343

606 520 512 745 0 2 0 2 0 3 0 1 403 520 602 850 0 1 0 2 0 3 0 2 407 390 2,502 0 1 0 1 0 1 0 I 418 396 359 301 0 5 0 4 0 4 0 4

2004 2005 2006 2007 0.4 0.4 0.4 0.4 0.5 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.2 0.3 0.3 0.3 0.3

minimum wage (RON) 280 310 330 390 net average wage (RON) 599 746 866 I043

* aulhor 's computations ha.& on M l J W and NIS data

Table A2.2. Magnitude of the main social assistance benefits

18

APPENDIX 3. MAIN SOCIAL ASSISTANCE BENEFITS: LEVELS AND ELIGIBILITY THRESHOLDS

83 148 206 255 304

+ 21

Table A3.1. I 2004 I 2005

I

2006 I 2007

Eligibility threshold

Eligibility threshold

Benefit Eligibility Benefit level threshold level

Benefit level

24 Child allowance I 21 I - I-- 23 ~~

160 per capita

34 40 45

50

- - -

-

36 42 47

52

168 per capita

176 per capita

50 52 176 per capita

168 per capita

160 per capita 59 62

70

79

67

76

800

-

- -

122

600

166 113 112 Allowances for disabled (including personal assistants)

Min. 24 246 per Min. capita I 27

280 per capita

500 per capita

District heating allowance

Max. 165 88 per Max. capita 185

100 per capita

Max. I 110 per 223 capita

consumpt ion 125 per

capita

Min. 10 t Max. 83 Natural gas heating allowance

280 per capita

100 per capita

500 per capita

125 per capita

capita

capita

Wood, coal heating allowance I 35 I bz%a I 43

500 per capita

125 per capita

GMI beneficia

r Y

Min. 14

Max. 46

137

G M I beneficia

r Y

88

158 220 273 325 + 22

310 746

48

I ry I ~~~~

126

Differenti al

Guaranteed Minimum Income @MI)

- single member family

- 2 members family

- 3 members family

- 4 members family

- 5 members family

- each additional member

130 139

92 166 231 287 341

96

I73 24 1

300 356

+ 24

390 1043

Differe ntial

Differenti a l

Differe ntial

I + 2 3 I I I

330 minimum wage 280 866 average net wage 599

19

APPENDIX 4. DECOMPOSITION OF THE GINI INDEX BY INCOME SOURCES

Table A4.1 Net Income

2004 2006

Income Concentration Absolute Relative Income Concentration Absolute Relative share index contribution contribution share index contribution contribution

net wages net income from agriculture net income from self-employment, other than agriculture

net pensions unemployment benefits targeted family benefits other family benefits disability allowances Guaranteed Minimum Income housing utilities allowances

school meals other in kind social assistance other cash social transfers gross income from capital

0 4404

0 2168

0 0383

0 1907

0 01 I 3

0 0022

0 0237

0 0041

0 0056

0 0014

00018

0 0077

0 0045

0 0074

0 0441

0 4483

0 1547

0 3356

0 2594

0 1210

-05117

-00018

-00150

-0 5635

-0 0870

-0 2359

0 4481

0 3088

0 8480

0 4884

0 1974

0 0335

0 0129

0 0495

0 0014

-0 001 I

-0 0000

-0 000 I

-0 003 I

-0 0001

-0 0004

0 0035

0 0014

0 0063

0 0215

0 6123

0 1041

0 0399

0 1534

0 0043

-0 0035

-0 0001

-0 0002

-0 0097

-0 0004

-00013

0 0107

0 0043

0 0195

0 0668

0.4820

0,1778

0.0366

0,1913

0.0062

0.0024

0 0303

0.0040

0.0045

0.0019

0.0016

0.0134

0.0037

0.0050

0.0394

0 4745

0 1034

0 2340

0 2622

0 0500

-0 5845

0 0978

-0 0337

-0 6592

-0 0873

-0 2586

0 5969

03154

0 761 I

0 4533

0 2287

0 0184

0 0086

0 0502

0 0003

-0 0014

0 0030

-0 0001

-0 0030

-0 0002

-0 0004

0 0080

0 0012

0 0038

0 0178

0 6830

0 0549

0 0256

0 1498

0 0009

-0 0042

0 0089

-0 0004

-0 0088

-0 0005

-00012

0 0239

0 0034

0 01 14

0 0533

Total 100000 0.322428 I000000 I00000 0.334854 I000000

[-I Decomposition with Rao's approach (1969)

Source: Romania Household Budget Surveys, authors' calculations

20

Table A4.2 Gross Income

2004 2006

Income Concentration Absolute Relative Income Concentration Absolute Relative share index contribution contribution share index contribution contribution

gross wages gross income from agriculture gross income from self- employment, other than agriculture gross pensions unemployment benefits targeted family benefits other family benefits disability allowances Guaranteed Minimum Income housing utilities allowances school meals other in kind social assistance other social transfers gross income from capital other income taxes and

0 5866

02168

0 0397

0 191 I

00113

0 0022

0 0237

0 0041

0 0056

0 0014

0 0018

0 0077

0 0045

0 0076

0 0441

.O 1481

0 4718

0 1547

0 3425

0 2605

0 1210

-0 51 I 7

-0 0018

-0 0150

-0 5635

-0 0870

-0 2359

0 4481

0 3088

0 8493

0 4884

0 5437

0 2768

0 0335

0 0136

0 0498

0 0014

-0 001 1

-0 0000

-0 0001

-0 003 1

-0 0001

-0 0004

0 0035

0 0014

0 0064

00215

-0 0805

0 8584

0 1041

0 0422

0 1544

0 0043

-0 0035

-0 0001

-0 0002

-0 0097

-0 0004

-0 0013

0 0107

0 0043

0 0199

0 0668

-0 2497

0 6308

0 1778

0 0382

0 1919

0 0062

0 0024

0 0303

0 0040

0 0045

0 0019

0 0016

00134

0 0037

0 0050

0 0394

-0 1510

0 4875

0 1034

0 2486

0 2640

0 0500

-0 5845

0 0978

-0 0337

-0 6592

-0 0873

-0 2586

0 5969

0 3154

0 7614

0 4533

0 5314

0 3075 0.9184

0.0184 0 0549

0 0095 0 0284

0 0507 0 1 5 1 3

0 0003 0 0009

-0 0014 -0 0042

0 0030 0 0089

-0 0001 -0 0004

-0.0030 -0.0088

-0 0002 -0 0005

-0 0004 -0 0012

0 0080 0 0239

OOOl2 0 0034

0 0038 0 01 I 4

0 0178 0 0533

-0 0803 -0 2397 contributions Total 10000 0.3224 10000 10000 0.3349 IO000

[-I Decomposition with Rao's approach (1969).

Source: Romania Household Budget Surveys, authors calculations

21

APPENDIX 5. EFFECTIVENESS OF SOCIAL PROTECTION BENEFITS

Table A5.1 - any social protection benefits

1 2 3 4 5

quintiles of consumption

Poorest decile

Area of residence

Region

HH head gender

HH head occupational status

HH head age

Urban Rural

North-Eat South-Eat

South South- West

West North-West

Centre Bucharest

male female

employee employer

self-employed non-agriculture self-employed

agriculture unemployed pensioner

pupil, student housewife

other Less than 35

35-60 More than 60

Family with children Rural poor Urban poor

Poor family with children Poor elderly Poor farmer

Poor pensioner Poor large household (more than 5)

Total

2004 91 91 90 87 78 92 84 91 89 86 90 89 85 88 87 81 87 89 77 78

81

84

88 100 48 82 84 84 83 99 98 92 91 98 98 86 100 96 87

Coverage (YO)

2005 91 90 89 85 76 90 83 91 88 86 89 87 83 87 85 82 86 89 75 75

82

83

88 100 54 79 84 82 81 99 98 91 89 99 98 86 100 95 86

2006 89 91 87 85 74 88 81 90 87 83 87 87 83 87 84 80 84 88 74 68

78

82

89 100 53 76 82 81 80 99 98 90 86 98 97 83 100 93 85

Targeting (YO) (distribution of funds)

2004 13 18 22 24 23 6 59 41 15 12 17 10 9 12 12 12 78 22 13 0

1

5

5 74 0 0 0 7

37 56 25 8 4 5 6 2 7 5

100

Source: Romania Household Budget Surveys, authors’ calculations

2005 13 18 21 24 25 5

60 40 15 12 16 10 9 12 12 14 78 22 14 0

2

6

4 74 0 0 0 8

35 57 26 6 3 4 4 2 5 3

100

2006 12 17 21 23 26 5

61 39 15 12 16 10 9 12 12 14 78 22 15 0

2

5

3 74 0 0 0 8

35 57 25 5 2 3 4 1 5 3

IO0

Adequacy (share of benefits in

beneficiaries’ consumption) 2004 0.47 0.42 0.38 0.33 0.23 0.51 0.32 0.33 0.3 1 0.33 0.34 0.33 0.33 0.30 0.33 0.36 0.3 I 0.39 0.12 0.07

0.12

0.25

0.34 0.55 0.14 0.22 0.27 0.15 0.23 0.58 0.18 0.47 0.46 0.37 0.69 0.34 0.67 0.38 0.33

2005 0.47 0.42 0.38 0.35 0.26 0.5 1 0.35 0.35 0.33 0.34 0.37 0.36 0.35 0.33 0.35 0.38 0.33 0.41 0.13 0.09

0.15

0.26

0.34 0.58 0.27 0.23 0.30 0. I 9 0.23 0.61 0.20 0.48 0.49 0.38 0.69 0.35 0.69 0.40 0.35

2006 0.47 0.42 0.40 0.36 0.28 0.50 0.36 0.37 0.34 0.36 0.38 0.37 0.34 0.34 0.36 0.39 0.35 0.43 0.14 0.1 1

0.14

0.26

0.33 0.61 0.21 0.24 0.46 0.19 0.24 0.64 0.21 0.48 0.49 0.37 0.71 0.32 0.71 0.38 0.36

22

Table A5.2 - any social insurance pension for former employees

Coverage (YO) Targeting (YO) (distribution of funds)

2004 2005 2006 2004 2005 2006 1 37 37 33 9 9 9 2 46 47 48 17 17 17

quintiles of consumption 3

4 5

Poorest decile Area of Urban

residence Rural North-Eat South-Eat

South South-West

West Region

North-West Centre

Bucharest

49 48 48 23 22 22 47 46 45 27 25 26 34 35 33 32 41 42 44 44 37 36 40 39 49 47 42 43 46 45 44 45 40 41 45 47

35 27 41 42 35 37 46 42 45 45 39 45

24 26 27 4 3 3 64 65 66 36 35 34 13 14 13 12 1 1 1 1 16 15 15 I O 9 I O I O 10 10 13 13 13 12 12 12 14 15 15

male 39 39 38 78 78 78 female 59 59 57 22 22 22

HH head gender

employee 15 I 5 I 5 7 employer 9 1 1 13 0

9 1 self-employed I non-aericul ture

16 3 self-Lmployed 18 17 agriculture

unemployed 12 11 II 1

HH head occupational

status pensioner 89 90 90 88

pupil, student 7 7 5 0 housewife 12 13 16 0

other 16 1 1 12 0 Less than 35 y.0. 9 8 8 2

HH head age 35-60 y.0. 33 32 31 34 More than 60 y.0. 84 84 84 65

Family with children 29 28 27 14 Rural poor 35 31 27 5 Urban poor 38 41 34 3

Poor family with children 27 26 19 2 Poor elderly 68 66 61 5 Poor farmer 14 11 8 1

Poor pensioner 78 79 72 7 Poor large household (more than 5) 36 33 25 3

Total 43 43 41 100


7 8 0 0

1 1

3 3

1 1 88 88 0 0 0 0 0 0 2 2

32 31 66 67 13 12 4 3 2 2 1 I 4 3 0 0 5 4 2 1

100 100


beneficiaries’ consumption) 2004 2005 2006 0.52 0.52 0.56 0.50 0.51 0.50 0.47 0.48 0.50 0.44 0.45 0.47 0.35 0.39 0.40 0.55 0.55 0 59 0.48 0.49 0.50 0.37 0.39 0.41 0.42 0.43 0.44 0.44 0.46 0.47 0.40 0.44 0.42 0.42 0.44 0.47 0.45 0.47 0.46 0.40 0.42 0.45 0.45 0.46 0.49 0.51 0.50 0.52 0.45 0.47 0.48 0.39 0.40 0.42 0.21 0.22 0.22 0.22 0.18 0.16

0.22 0.20 0.24

0.34 0.35 0.34

0.25 0.25 0.27 0.49 0.51 0.53 0.23 0.34 0.33 0.25 0.33 0.23 0.23 0.34 0.35 0.22 0.24 0.24 0.34 0.35 0.35 0.52 0.54 0.57 0.25 0.26 0.26 0.48 0.51 0.54 0.59 0.60 0.64 0.36 0.36 0.38 0.58 0.61 0.63 0.46 0.46 0.47 0.55 0.57 0.60 0.36 0.36 0.37 0.43 0.45 0.47

23

Table A53 - farmer pensions

1 2 3 4 5

quintiles of consumption

Poorest decile

Area of residence

Region

HH head gender


status

HH head age

Urban Rural

North-Eat South-Eat

South South- West

West North- West

Centre Bucharest

male female

employee employer

self-employed non- agriculture

self-employed agriculture

unemployed pensioner


other Less than 35 y.0.

More than 60 y.0. 35-60 y.0.




Total

2004 17 17 13 8 5 16 1

24 15 13 16 20 6 13 6 0 I O 20 2 0

3

II

1 26 0 3 5 2 4

35 9

23 3 II 47 9

37 14 12

Coverage (YO)

2005 16 16 12 8 4 15 2

22 13 12 15 20 7 9 6 1 9 18 I 2

2

II

1 24 0 1 2 2 3

33 8

20 3 I O 45 9

34 14 11

2006 17 16 11 7 3 16 1

22 13 12 15 19 6 10 6 1 9 17 2 2

3

1 1

2 24 0 1 4 1 3

32 8

23 5 II 5 1 6

44 15 11


2004 26 30 23 14 8 12 5

95 25 14 20 18 4 13 7 0 70 30 2 0

I

I O

0 87 0 0 0 I

I O 89 15 23 1 4

21 3

21 5

100

2005 27 30 23 14 6 13 6

94 25 16 20 17 4 II 7 I

69 31 2 0

I

II

0 86 0 0 0 1 8

91 15 19 I 3 18 2 17 4

100

2006 30 31 21 12 5 14 6

94 25 16 19 18 4 I O 8 1

69 31 3 0

I

I O

0 86 0 0 0 1 10 89 16 20 1 4 19 2 19 4

100


beneficiaries’ consumption) 2004 0.29 0.22 0.17 0.12 0.08 0.34 0.12 0.18 0.21 0.18 0.15 0.18 0.12 0.15 0.17 0.07 0.17 0.18 0.06

0.09

0.18

0.1 I 0.18

0.12 0.20 0.09 0.10 0.19 0.10 0.30 0.19 0.17 0.33 0.26 0.3 1 0.16 0.17

2005 0.29 0.2 I 0.16 0.12 0.08 0.36 0.12 0.18 0.21 0.19 0.17 0.17 0.12 0.15 0.17 0.08 0.17 0.18 0.07 0.14

0.09

0.17

0.08 0.18

0.04 0.16 0.10 0.10 0.19 0.09 0.32 0.25 0.16 0.34 0.26 0.33 0.16 0.17

2006 0.32 0.23 0.17 0.12 0.10 0.39 0.17 0.20 0.24 0.22 0.17 0.20 0.14 0.15 0.21 0.1 I 0.19 0.22 0.09 0.04

0.08

0.18

0.09 0.21

0.07 0.28 0.10 0.11 0.22 0.1 1 0.34 0.29 0.20 0.36 0.29 0.35 0.19 0.20


24

Table A 5 4 - other benefits than pension

1 quintiles of 2

consumption before 3 4 5

50% of transfer

Poorest decile before 50% of transfer

Area of residence

Region

HH head gender

Urban Rural

North-Emt South-East

South South-West

West North-West

Centre Bucharest

male female

employee employer


self-employed HH head agriculture

occupational status unemployed

pensioner pupil, student

housewife other

Less than 35 y,o,

More than 60 y,o. HH head age 35-60 y.0.

Family with children

Rural poor Urban poor



Total

2004 74 68 66 63 60 76 65 67 69 66 67 66 64 65 67 60 67 59 72 73

78

74

86 52 45 78 77 82 69 50 98 73 76 9 1 56 79 61 91 66

Coverage (YO)

2005 13 68 64 63 58 75 64 66 69 65 6 1 65 60 64 65 64 66 59 70 66

78

73

86 52 5 1 76 81 80 68 50 97 73 77 98 5 5 81 60 92 65

2006 71 67 62 63 59 72 63 66 67 64 65 64 60 64 65 62 65 59 68 65

75

73

85 53 50 71 79 79 67 50 97 12 71 98 54 78 57 89 64


2004 19 18 19 19 24 I O 57 43 17 13 17 I O 8 12 14 9 82 18 33 I

4

1 1

16 32 0 I 1

25 52 24 59 I 2 6 13 4 5 5

I O 100

2005 18 17 18 21 26 9 59 41 18 1 1 16 I O 8 12 14 12 81 19 35 I

5

12

13 32

1 1 1

27 48 25 61 I O 4 I O

3 4 3 8

100

2006 17 16 18 20 29 9

60 40 18 12 18 9 8 I 1 12 12 81 19 37

1

4

I O

I O 35 0 1 1

26 49 25 61 8 3 8 2 4 3 6

100


beneficiaries’ consumption) 2004 0.23 0.14 0.12 0.09 0.08 0.29 0.1 1 0.12 0.12 0.12 0.12 0.1 1 0.10 0.10 0.13 0.09 0.1 I 0.13 0.08 0.05

0.08

0.15

0.3 1 0.13 0.12 0.18 0.24 0.13 0.10 0.13 0.11 0.24 0.21 0.24 0.21 0.25 0.19 0.22 0.1 1

200s 0.23 0.14 0.12 0.1 I 0.10 0.28 0.12 0.14 0.13 0.12 0.14 0.13 0.1 1 0.1 I 0.14 0.1 I 0.12 0.15 0.09 0.08

0.12

0.17

0.31 0.14 0.26 0.18 0.26 0.16 0.10 0.15 0.13 0.26 0.22 0.26 0.21 0.28 0.20 0.24 0.13

2006 0 22 0 I5 0 13 0 II 0 1 1 0 29 0 12 0 1 5 0 14 0 13 0 16 0 13 0 II 0 II 0 13 0 1 1 0 13 0 15 0 I O 0 08

0 II

0 17

0 30 0 I 5 0 19 0 19 0 38 0 17 011 0 15 0 13 0 26 0 24 0 27 0 22 0 27 0 20 0 24 0 13


25

Table A5.5 - means/ income-tested cash social assistance transfers (targeted family benefits and GMI)


beneficiaries’ consumption) 2004 2005 2006 0.23 0.19 0.19 0.12 0.10 0.09 0.07 0.06 0.06 0.05 0.05 0.05 0.10 0.04 0.04 0.28 0.25 0.25 0.14 0.11 0.1 I 0.14 0.11 0.11 0.12 0.10 0.11 0.16 0.12 0.10 0.15 0.10 0.10 0.13 0.11 0.11 0.16 0.13 0.14 0.10 0.08 0.10 0.17 0.14 0.12 0.17 0.16 0.12 0.13 0.10 0.10 0.18 0.13 0.14 0.07 0.05 0.05

- 0.06 0.02

0.12 0.10 0.09

0.17 0.13 0.14

0.25 0.21 0.21 0.09 0.08 0.08 0.10 0.61 0.33 0.25 0.22 0.32 0.27 0.25 0.15 0.13 0.14 0.14 0.10 0.1 I 0.11 0.09 0.09 0.13 0.10 0.10 0.23 0.21 0.2 1 0.25 0.22 0.26 0.23 0.20 0.2 1 0.19 0.17 0.18 0.25 0.22 0.23 0.16 0.14 0.15 0.21 0.18 0.19 0.14 0.1 I 0.11

Targeting (%) (distribution of funds) Coverage (%)

2004 2005 2006 2004 2005 2006 1 29 34 32 57 55 59

quintiles o f 2 14 19 16 23 24 23 3 7 1 1 9 9 11 10 consumption

before 50% of transfer 4 4 6 5 5 6 6

5 Poorest decile before 50% o f transfer

Area of Urban residence Rural

North-Eat South-Eat

South South- West

West North-West

Centre Bucharest

Region

2 2 2 6 4 2 35 39 38 36 33 38 4 6 4 22 23 21 19 25 23 78 77 79 17 22 20 21 24 26 II 15 12 15 13 12 12 17 15 19 17 18 18 20 20 18 17 17 7 6 5 6 4 5 9 14 1 1 9 11 I O I O 12 II 11 12 I 1 1 2 I 1 2 2

male 11 14 13 79 77 78 female 10 14 13 21 23 22

HH head gender

employee 5 7 6 I 2 I O 10 employer 0 3 1 0 0 0

28 23 7 9 8

44 40 36 39 41

self-employed non-agriculture self-employed 33

agriculture HH head occupational

status unemployed 29 28 31 21 I 5 18 pensioner


other Less than 35 y.0.

More than 60 y.0. HH head age 35-60 Y.O.




Total

7 9 8 18 19 16 0 5 0 0 1 0

20 30 29 3 3 3 29 43 45 3 4 3 18 23 19 30 31 28 11 14 13 55 52 55 I 10 9 15 16 17

21 28 25 76 77 77 34 42 40 42 37 37 20 27 23 13 10 9 43 57 56 42 36 35 18 21 23 8 7 8 42 58 53 21 20 22 18 19 20 9 6 6 40 5 1 48 31 26 24 II 14 13 100 100 100


26

Table A5.6 - income-tested family allowances Targeting (%)

(distribution of funds) Coverage (YO)

2004 2005 2006 2004 2005 1 16 25 23 41 42

quintiles of 2 I O 16 14 28 28 3 6 I O 8 17 17 consumption

before 50% of transfer 4 3 5 4 9 9

5 1 2 2 4 4 Poorest decile before 50% of transfer 18 27 25 22 22

Area of Urban 3 4 3 22 22 residence Rural 13 21 19 78 78

North-Eat 13 19 17 32 29 South-Eat 8 12 I O 13 13

South 8 14 1 1 18 18 16 17 14

West 3 4 3 3 3 South-West 13 16

Region

North-West Centre

Bucharest HH head male gender female

employee employer


self-employed agriculture

status unemployed


6 12 9 1 1 13 4 8 9 6 9 0 1 I 0 I 8 12 II 84 81 6 1 1 8 16 19 5 6 5 25 21 0 3 I 0 0

13 22 18 I O II

21 36 33 34 35

11 17 19 8 8 pensioner 5 8 6 22 22

0 0 0 housewife 7 18 13 1 2

other 8 21 18 I I

pupil, student 0 0

Less than 35 y,o, 12 20 16 33 32 HH head age 35-60 y.0. 7 II I O 53 52

More than 60 y.0. 5 8 7 13 15 Family with children 15 24 22 92 91

Rural poor 19 31 29 31 27 Urban poor I O 16 13 8 6

Poor family with children 26 45 43 35 30 Poor elderly 9 14 15 5 4 Poor farmer 25 45 39 17 15

Poor pensioner 12 15 16 9 6 Poor large household (more than 5) 24 40 36 26 21

Total 7 12 I O 100 100

Source: Romania Household Budget Surveys, authors ’ calculations

2006 45 27 16 8 3

24 19 81 29 13 17 17 2 II 10 I

83 17 21 0

I O

37

9 20 0 1 1

30 54 16 92 28 5

30 5 16 7

20 IO0


beneficiaries’ consumption) 2004 2005 2006 0.08 0.07 0.07 0.06 0.05 0.05 0.04 0.04 0.03 0.04 0.03 0.03 0.03 0.02 0.02 0.09 0.08 0.09 0.06 0.05 0.05 0.06 0.05 0.05 0.07 0.05 0.05 0.06 0.05 0.05 0.05 0.05 0.04 0.05 0.04 0.05 0.05 0.05 0.04 0.05 0.04 0.05 0.06 0.05 0.05 0.05 0.06 0.04 0.05 0.05 0.05 0.07 0.05 0.06 0.05 0 0 4 0.04

0.03 0.02

0.07 0.05 0.05

0.07 0.05 0.05

0.07 0.06 0.06 0.04 0.04 0.04

0.08 0.07 0.06 0.1 1 0.06 0.06 0.07 0.06 0.06 0.06 0.05 0.04 0.04 0.04 0.04 0.06 0.05 0.05 0.09 0.08 0.08 0.08 0.07 0.09 0.09 0.08 0.08 0.07 0.06 0.07 0.10 0.08 0.08 0.07 0.07 0.07 0.08 0.07 0.07 0.06 0.05 0.05

27

Table A5.7 - non-targeted family allowances (child allowance and child-raising)

I 2 quintiles of

50% of transfer consumption before 3

4 5

Poorest decile before 50% of transfer

Area of residence

Region

HH head gender


HH head age

Urban Rural

North-East South-East

South South-West

West North-West

Centre Bucharest

Male female

employee employer




Other Less than 35

35-60 More than 60




Total

Coverage (%)

2004 64 57 55 52 49 65 54 57 60 56 56 56 54 56 55 46 58 44 68 68

74

65 71 34 24 68 58 80 61 30 96 63 67 96 39 70 47 86 55

2005 64 57 54 51 46 65 52 57 58 5 5 5 5 56 51 55 53 48 57 44 65 62

74

66 69 34 26 65 64 78 60 30 96 63 68 97 39 74 47 88 54

2006 62 56 5 1 49 46 63 50 56 57 53 52 55 50 54 52 46 55 43 63 61

71

65 69 33 24 64 5 1 77 58 29 96 62 64 97 38 70 44 85 53

Targeting (%) (distribution o f funds)

2004 17 16 20 20 28

8 61 39 18 12 15 9 8

16 14 9

87 13 57 I

5

I O 7

18 0 1 0

40 49 I O 89 I O 6

14 2 4 4

10 IO0

2005 14 15 17 23 31

6 63 37 18 12 15 9 8

14 14 I O

87 13 59

2

6

10 6

17 0 1 0

44 46 11 91

7 3 9 I 3 2 7

IO0

2006 13 15 19 25 28

6 62 38 18 14 16 9 8

13 12 1 1 85 15 62

1

6

8 6

17 0 1 0

44 45 12 92

6 3 7 I 3 2 5

IO0


beneficiaries’ consumption)

2004 0.09 0.06 0.06 0.05 0.04 0.10 0.05 0.05 0.05 0.05 0.05 0.04 0.04 0.06 0.06 0.05 0.05 0.05 0.05 0.03

0.05

0.06 0.07 0.05 0.04 0.07 0.07 0.08 0.04 0.04 0.06 0.09 0.08 0 I O 0.08 0.09 0.07 0.09 0.05

2005 0.08 0.06 0.06 0.06 0.06 0.09 0.07 0.06 0.07 0.06 0.07 0.06 0.06 0.06 0.08 0.06 0.07 0.06 0.07 0.07

0.06

0.07 0.09 0.05 0.05 0.07 0.06 0.12 0.05 0.05 0.08 0.09 0.08 0.10 0.07 0.09 0.07 0.09 0.06

2006 0.09 0.07 0.08 0.08 0.06 0.10 0.07 0.08 0.08 0.08 0.08 0.06 0.07 0.07 0.08 0.07 0.07 0.08 0.08 0.05

0.07

0.07 0.09 0.06 0.06 0.07 0.1 1 0.13 0.05 0.07 0.09 0.09 0.10 0.1 I 0.07 0.09 0.07 0.10 0.07

Source: Romania Household Budget Surveys, authors ’ calculations

28

Table A5.8 - Guaranteed Minimum Income

Coverage (X) Targeting (YO) (distribution of funds)

2004 2005 2006 2004 2005 I 11 17 16 64 63

quintiles o f 2 6 5 5 21 21 consumption before 3 2 2 2 6 7

4 1 1 1 3 5 5 0 0 0 7 3

Poorest decile before 50% of transfer 23 2 1 22 42 40

50% of transfer

Urban 2 2 2 23 24 Rural 9 9 8 7 1 76

Area of residence

Region

North-Eat 7 7 7 17 22 South-Eat 5 5 4 16 13

South 6 6 6 20 17 South-West 7 8 7 18 18

West 5 3 3 7 5 North-West 3 4 4 8 9

Centre 7 5 4 13 13 Bucharest 1 1 1 1 3

Male 5 5 4 17 76 female 6 6 6 23 24

HH head gender

employee I 1 0 6 4 employer 0 1 0 0 0

9 7 6 9 self-employed non-agriculture self-employed

HH head agriculture Occupational StatUS unemployed


housewife other

Less than 35 HH head age 35-60

More than 60 Family with children




Total

18 19 18 37

21 18 21 26 3 2 2 17 0 5 0 0 16 21 21 4 25 29 32 4 8 8 1 29 5 5 5 5 5 3 3 3 16 9 9 8 70

21 21 21 46 12 14 14 15 25 27 28 44 I O I O I1 9 27 30 28 22 I O 7 7 9 23 24 24 33 5 5 5 100

42

19 17 I 4 5

31 52 17 69 42 13 39 8

23 6

29 100

2006 66 20 8 4 2

45 22 78 25 II 18 18 6 I O 1 1 2

75 25 4 0

7

43

24 14 0 4 4

28 55 17 69 43 12 38 9

25 6

27 100


beneficiaries’ consumption) 2004 2005 2006 0.31 0.30 0.30 0.19 0.19 0.19 0.12 0.14 0.15 0.11 0.14 0.13 0.30 0.12 0.18 0.35 0.35 0.34 0.26 0.26 0.25 0.24 0.22 0.23 0.19 0.20 0.23 0.31 0.25 0.24 0.27 0.22 0.2 I 0.27 0.23 0.25 0.22 0.24 0.25 0.24 0.22 0.23 0.23 0.27 0.28 0.20 0.26 0.20 0.24 0.22 0.24 0.27 0.25 0.24 0.18 0.12 0.14

- 0.11

0.19 0.23 0.19

0.25 0 22 0.25

0.32 0.31 0.30 0.18 0.18 0.18 0.10 0.61 0.40 0.34 0.28 0.32 0.38 0.32 0.29 0.27 0.29 0.24 0.22 0.23 0.22 0.21 0.21 0.24 0.22 0.23 0.30 0.31 0.3 1 0.35 0.35 0.37 0.31 0.31 0.3 1 0.29 0.28 0.30 0.30 0.30 0.3 I 0.22 0.25 0.27 0.29 0.29 0.29 0.24 0.23 0.24


29

Table A5.9 - heating allowances Targeting (%)

(distribution of funds) Coverage (%)

2004 2005 2006 2004 2005 I 3 4 4 1 5 13 2 5 6 8 26 23

consumption before 3 5 8 9 25 30 4 4 6 7 21 20 5 2 3 3 13 13

Poorest decile before 50% of transfer 2 4 3 5 6

quintiles of

50% o f transfer

Urban 6 8 8 81 79 Rural 1 2 3 19 21

Area of residence

Region

North-Emt 4 5 5 19 16 South-Ekt 2 3 5 8 8

South 4 5 6 12 16 South- West 3 3 4 10 6

West 3 5 5 I 9 North- West 3 6 6 8 12

Centre 8 II 13 19 21 Bucharest 6 6 5 16 12

male 4 5 5 59 68 female 7 7 8 41 32

HH head gender

employee employer


HH head agriculture Occupational status unemployed


housewife other

Less than 35 HH head age 35-60

More than 60 Family with children




Total

4 5 6 26 29 0 0 0 0 0

3 7 4 3 8

2 3 2 5 8

7 11 I 1 14 12 5 5 I 46 41 9 3 10 1 0 14 13 6 4 2 4 2 13 1 0 3 6 4 12 18 5 6 6 57 57 4 4 6 31 25 4 6 6 34 43 1 2 1 5 3 I 9 I O 9 6 2 5 3 4 5 4 1 4 4 I 1 2 0 1 1 4 3 5 5 3 3 5 4 4 5 4 5 6 100 100

2006 11 24 29 22 13 3 74 26 16 9 1 5 8 7 9

26 10 66 34 29 0

5

4

12 46 1 1 2 I 1 59 30 36

1 4 2 2 0 3 3

100


beneficiaries’ consumption) 2004 2005 2006 0.14 0.15 0.15 0.12 0.11 0.12 0.09 0.09 0.10 0.08 0.07 0.07 0.06 0.06 0.06 0.18 0.15 0.15 0.09 0.08 0.09 0.10 0.10 0.10 0.11 0.10 0.10 0.10 0.10 0.07 0.08 0.08 0.10 0.10 0.11 0.12 0.08 0.08 0.10 0.07 0.07 0.07 0.08 0.09 0.09 0.10 0.08 0.11 0.08 0.08 0.08 0.12 0.11 0.12 0.07 0.07 0.07

0.10 0.09 0.12

0.13 0.11 0.12

0.11 0.12 0.12 0.09 0.09 0.10 0.10 0.13 0.09 0.14 0.09 0.14 0.11 0.22 0.26 0.10 0.09 0.08 0.08 0.08 0.09 0.1 I 0.09 0.09 0.08 0.08 0.09 0.16 0.14 0.15 0.15 0.15 0.14 0.13 0.14 0.14 0.14 0.14 0.16 0.21 0.16 0.17 0.13 0.15 0.15 0.09 0.14 0.12 0.09 0.09 0.09


30

Table A5.10 - unemployment benefits Targeting (YO)

(distribution o f funds) Coverage (YO)

2004 2005 2006 2004 2005 2006 1 3 3 3 11 I 5 18

quintiles o f 2 5 4 3 25 25 25 consumption before 3 4 4 3 23 25 25

4 4 3 2 23 21 18 5 3 2 1 17 13 14

Poorest decile before 50% o f transfer 2 3 3 4 6 8

50% of transfer

Urban 5 4 2 71 66 60 Rural 3 3 2 29 34 40

Area o f residence

North-Eat 3 3 2 12 18 17 South-Eat 4 2 2 12 8 II

South 5 4 3 20 18 18 South-West 4 3 3 I O I O 11

West 6 5 3 13 12 13 North-West 2 3 2 8 9 8

Centre 5 4 3 16 I 5 I 5 Bucharest 3 3 I 8 II 6

Region

male 4 3 3 86 84 84 female 3 3 2 14 16 16

HH head gender

employee 3 2 1 25 25 20 employer 2 I I 1 0 0

2 2 1 2 3

1 1 1 3 4 2

occupational status unemployed 28 28 24 5 1 51 53 pensioner 2 2 2 18 18 21

pupil, student 0 3 0 0 0 0 housewife 4 I 1 I 0 0

other 2 I 0 0 0 0 Less than 35 3 2 2 16 15 1 1

HH head age 35-60 5 4 3 73 74 76 More than 60 2 2 1 I O 12 13

Family with children 4 3 3 39 39 40

self-employed I non-agriculture self-employed

HH head agriculture

Rural poor 2 2 2 4 7 5 Urban poor 5 4 4 6 5 5

Poor family with children 3 3 2 5 5 4 Poor elderly 2 2 1 2 2 1 Poor farmer 1 1 0 I 1 0

Poor pensioner 2 2 2 3 2 2 Poor large household (more than 5) 3 3 3 3 4 4

Total 4 3 2 100 100 100 Source: Romania Household Budget Surveys, authors’ calculations

Adequacy (share o f benefits in

beneficiaries’ consumption) 2004 2005 2006 0.41 0.44 0.40 0.32 0.30 0.30 0.28 0.25 0.25 0.23 0.21 0.2 I 0.18 0.17 0 14 0 4 6 0.47 0.43 0.26 0.26 0.24 0.26 0.25 0.24 0.27 0.29 0.25 0.24 0.25 0.25 0.27 0.24 0.22 0.29 0.27 0.25 0.26 0.24 0.25 0.24 0.20 0.23 0.27 0.27 0.27 0.26 0.26 0.22 0.25 0.25 0.24 0.31 0.29 0.27 0.21 0.21 0.18 0.21 0.12 0.16

0.26 0.17 0.21

0.30 0.31 0.2 1

0.32 0.31 0.30 0.23 0.21 0.21

- 0.19

0.38 0.62 0.33 0.29 0.28 0.30 0.33 0.25 0.26 0.25 0.25 0.25 0.21 0.2 I 0.25 0.25 0.23 0.41 0.46 0.39 0.43 0.48 0.48 0.40 0.44 0.37 0.45 0.40 0.3 I 0.36 0.46 0.39 0.42 0.41 0.32 0.32 0.36 0.3 1 0.26 0.25 0.24

31

Table A5.11 - any in kind social benefits

I quintiles of 2


50% of transfer

Poorest decile before 50% o f transfer

Area of residence

Region

HH head gender


HH head age

Urban Rural

North-East South-Eat

South South-West

West North-West

Centre Bucharest

male female

employee employer




other Less than 35

35-60 More than 60




Total

2004 22 21 22 21 22 24 21 23 25 22 24 19 20 20 21 18 22 20 20 21

25

27

24 21 I O 26 14 31 19 21 36 23 22 37 15 26 16 31 22

Coverage (%)

2005 24 23 22 22 22 22 21 24 24 21 25 19 19 22 22 26 23 21 20 18

28

27

22 24 18 17 32 30 20 23 37 23 24 38 15 28 18 33 23

2006 23 25 22 24 25 23 23 25 27 24 28 19 19 22 23 24 24 24 20 23

26

27

31 26 13 26 28 31 21 25 37 23 20 37 17 28 19 33 24


2004 9 II 16 22 41 4 67 33 15 15 17 8 I II 1 1 17 77 23 22 1

3

7

4 63 0 1 0 12 41 47 36 5 3 7 2 2 3 5

100

2005 8 I O 14 23 46 3

73 27 14 II 14 8 5

1 1 11 26 73 27 23 0

3

6

2 64

1 0 0 I O 39 50 30 3 2 3 I 1 2 3

100

2006 6 8 II 18 57 3 78 22 13 11 25 6 5 10 7

24 79 21 20 2

2

4

2 69 0 0 I 8

47 45 26 2 1 2 I I 1 2

IO0

2004 0.06 0.05 0.05 0.05 0.06 0.06 0.06 0.04 0.05 0.06 0.05 0.05 0.04 0.04 0.05 0.08 0.05 0.07 0.03 0.02

0.03

0.04

0.04 0.08 0.03 0.05 0.05 0.03 0.04 0.08 0.03 0.05 0.07 0.05 0.06 0.05 0.06 0.05 0.05

2005 0.05 0.05 0.05 0.06 0.07 0.05 0.07 0.05 0.05 0.06 0.05 0.06 0.04 0.05 0.06 0.10 0.06 0.09 0.04 0.02

0.04

0.04

0.04 0.10 0.18 0.03 0.06 0.03 0.05 0.10 0.03 0.05 0.05 0.04 0.07 0.05 0.06 0.04 0.06

2006 0.05 0.05 0.05 0.06 0.10 0.06 0.09 0.05 0.06 0.06 0.10 0.06 0.05 0.06 0.05 0.12 0.07 0.08 0.04 0.09

0.03

0.05

0.04 0.12 0.06 0.05 0.14 0.03 0.07 0.10 0.03 0.05 0.07 0.05 0.06 0.05 0.06 0.05 0.07

Adequacy (share o f benefits in

beneficiaries’ consumption)


32

Table A512 - subsidized medicines Targeting (YO)

(distribution of funds) Coverage (YO)

2004 2005 2006 2004 2005 1 2 2 3 3 2 2 4 4 6 8 6 quintiles o f

50% of transfer consumption before 3 6 6 7 16 II

4 6 8 I O 24 24 5 7 9 1 1 49 56

Poorest decile before 50% of transfer 2 1 2 1 0 Urban 7 8 I O 76 81 Rural 3 3 4 24 19

Area of residence

Region

North-Eat 4 4 7 13 13 South-Eat 5 4 7 13 I O

South 5 6 7 20 14 South-West 2 4 5 4 6

West 5 5 6 6 4 North-West 6 5 7 I O 8

Centre 8 8 8 14 12 Bucharest 7 13 14 20 33

male 5 6 7 74 72 female 6 7 9 26 28

HH head gender

employee 3 4 5 18 20 employer 3 3 4 0 0

2 1 1 1

3 2 3 3 2


HH head agriculture occupational status unemployed 3 3 4 2 1

pensioner 9 1 1 14 76 75 pupil, student 0 3 2 0 0

housewife 3 1 2 0 0 other 2 3 8 0 0

Less than 35 2 2 3 5 3 HH head age 35-60 4 5 6 40 37

More than 60 9 I O 14 55 ' 59 Family with children 4 4 5 18 18

Rural poor 2 I 2 1 0 Urban poor 4 3 4 1 1

Poor family with children 3 2 2 1 0 Poor elderly 3 3 4 1 0 Poor farmer 2 1 1 0 0

Poor pensioner 3 4 5 I I Poor large household (more than 5) 3 2 3 1 0

Total 5 6 8 100 100

Source: Romania Household Budget Surveys, authors' calculations

2006 2 5 9 17 67 1

83 17 II 11 28 4 5 7 7

27 79 21 16 2

0

2

1 78 0 0 1 4 48 48 16 1 0 0 1 0 1 0

100


beneficiaries' consumption) 2004 2005 2006 0.07 0.10 0 08 0.08 0.08 0.08 0.08 0.09 0.09 0.09 0.10 0.08 0.10 0.12 0.17 0.08 0.08 0.10 0.09 0.1 1 0.13 0.09 0.10 0.10 0.09 0.1 1 0.10 0.09 0.12 0.12 0.12 0.1 I 0.22 0.09 0.10 0.07 0.06 0.06 0.09 0.07 0.08 0.09 0.07 0 09 0.07 0.13 0.14 0.15 0.09 0.10 0.13 0.11 0.14 0.12 0.06 0.08 0.08 0.06 0.02 0.27

0.06 0.08 0.07

0.07 0.11 0.10

0.07 0.09 0.05 0.11 0.12 0.15

- 0.27 0.01

0.05 0.04 0.09 0.21 0.10 0.22 0.07 0.07 0.07 0.08 0.09 0.14 0.11 0.13 0.12 0.06 0.08 0.09 0.08 0.06 0.10 0.07 0.09 0.07 0.08 0.06 0.04 0.06 0.07 0.08 0.07 0.05 0.13 0.08 0.08 0.08 0.07 0.06 0.07 0.09 0.1 1 0.13

33

Table A513 - bread and milk in the school

Coverage (%) Targeting (%) (distribution of funds)

1 quintiles of 2


50%' of transfer

Poorest decile before 50% of transfer Urban Rural

Area of residence

Region

North-Eat South-Eat

South South-West

West North-West

Centre Bucharest

male female

HH head gender

employee employer

2004 2005 2006 2004 2005 18 19 19 24 24 15 17 16 21 23 14 13 13 20 20 12 1 1 12 17 16 12 II I O 18 17 20 17 19 13 I O II 10 I O 44 42 17 19 18 56 58 19 17 18 24 23 II 13 15 II 12 16 17 16 18 18 I 5 14 12 II 9 14 12 II I O 8 13 14 13 II 12 12 14 14 11 12 6 6 5 4 5 15 15 14 86 8 7 11 1 1 12 14 13 15 14 13 44 43 17 14 17 1 1

2006 26 22 18 19 15 12 42 58 23 13 17 8 8 12 13 6

85 15 43

1

21 24 22 8 I O 9

23 24 23 18 19 19


HH head agriculture occupational status unemployed 19 18 25 9 6 8

pensioner 8 9 8 18 18 17 pupil, student 0 3 3 0 0 0

housewife 22 15 21 1 1 1 other II 22 19 0 I 2

HH head age Lessthan35 27 27 27 38 38 36 35-60 12 13 13 48 5 0 5 1

More than 60 9 8 8 14 13 12 Family with children 30 32 32 100 100 99

Rural poor 19 19 19 16 13 13 Urban poor 17 17 15 7 4 4

Poor family with children 33 34 35 23 17 17 Poor elderly I O 8 9 3 2 3 Poor farmer 24 24 26 8 6 7

Poor pensioner I O I O 11 4 3 3 Poor large household (more than 5) 27 29 30 15 13 12

Total 14 14 14 100 100 100 Source: Romania Household Budget Surveys, authors' calculations


beneficiaries' consumption) 2004 2005 2006 0.04 0.03 0.03 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.02 0.01 0.01 0.01 0.04 0.04 0.04 0.02 0.01 0.01 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.02 0.01 0.01 0.01

0.02 0.02 0.02

0.02

0.03 0.02

0.03 0.02 0.02 0.02 0.02 0.02 0.04 0.04 0.04 0.03 0.04 0.03 0.04 0.02

0.02

0.02 0.01 0.02 0.02 0.02 0.02 0.02 0.01 0.02 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.02

0.02

0.02 0.02 0.02 0.03 0.07 0.02 0.02 0.02 0.02 0.04 0.03 0.04 0.03 0.04 0.03 0.03 0.02

34

APPENDIX 6. GEOGRAPHICAL DISTRIBUTION OF POVERTY AND MALV T4RGElED TRANSFERS

/ Poverty rate and GMI program participation I Spearman's Rho (20031)

i? 1-1

L

051 ~

031 ~

001 - -0 25 -

Source:, authors' calculations based on Romania Poverty Map (University of Bucharest, 2004) and administrative data on GMI (MLFEO)

35

Table A6.1 Guaranteed Minimum Income 2006

Distribution o f Distribution o f Distribution o f Distribution o f poor beneficiaries poverty gap funds

North-Est 4 4 4 4 South-Est 5 3 5 3

South 4 5 5 5 Urban South- West 3 2 3 2

West 2 1 I 2 North- West 2 1 1 1

Centre 4 2 4 3 Bucharest 3 1 2 2

Rural

North-Est SoUth-Emt

South South-West

West North-West

Centre Bucharest

21 I 1 11 12 3 8 7 1

22 8 15 14 4 9 9 0

21 12 11 12 3 9 8 1

21 8 13 16 4 8 8 0

I Total IO0 IO0 IO0 IO0

Source: Romania Household Budget Survey, authors ’ calculations

36

Table A6.2 Targeted (income-tested) Family Benefits 2006

Distribution o f Distribution o f poor (members Distribution o f poverty gap (for Distribution o f o f households beneficiaries households with funds with children) children)

North-Eat 4 3 4 3 South-Eat 4 3 4 3

South 4 3 4 3 Urban South-West 4 3 3 3

West 1 1 1 1 North- West 1 1 1 2

Centre 5 3 5 3 Bucharest 3 0 2 0

Rural

North-Eat South-Eat

South South- West

West North-West

Centre Bucharest

23 II II II 3 9 7 0

27 I O 15 13 1 9 7

0

24 12 I O I O 3 9 8 0

26 I O 14 13 1 9 7 0

Total 100 100 IO0 IO0

Source: Romania Household Budget Survey, authors’ calculations

37

Documents

Report No. 47490-RO Romania Poverty Monitoring Analytical ...€¦ · 1. During recent years Romania made efforts to redistribute the benefits of growth by keeping constant the share