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 Poverty, Old-Age and Social Pensions in Kenya
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ho are w orking in agricultural or construction sectors. Surprisingly, the results reveal that giving pensions to unemployed elderly do not result in a pro-poor outcome. These conclusions generally hold for both the 1994 and 1997 years. TABLE 6.3 Pro-Poor Po...
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ho are w orking in agricultural or construction sectors. Surprisingly, the results reveal that giving pensions to unemployed elderly do not result in a pro-poor outcome. These conclusions generally hold for both the 1994 and 1997 years. TABLE 6.3 Pro-Poor Policy index for universal pension to vulnerable groups of elderly Targeting 55 years & over 60 years & over 1994 Elderly living alone 0.40 0.43 Widowed elderly 0.87 0.87 Subsistence farming elderly 1.32 1.35 Pastoralist elderly 1.69 1.73
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POVERTY, OLD-A G E A N D SOCIA L PEN SION S <span class="highlight">IN</span> KEN YA &lowast; Nanak Kakwani,&lowast;&lowast; H yun H . Son&lowast;&lowast; and Richard H inz&lowast;&lowast;&lowast; A BSTRA CT This study is concerned with old-age poverty <span class="highlight">in</span> Kenya. It is also concerned with strengthening and developing social pension program s <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span>. <span class="highlight">In</span> this study, we develop precise socioeconom ic and dem ographic profiles of <span class="highlight">the</span> <span class="highlight">elderly</span> <span class="highlight">in</span> Kenya from <span class="highlight">the</span> viewpoint of providing policy-m akers with inform ation that m ay be useful <span class="highlight">in</span> <span class="highlight">the</span> reform and expansion of <span class="highlight">the</span>
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large, and poverty rates of <span class="highlight">the</span> <span class="highlight">elderly</span> increased between 1994 and 1997, <span class="highlight">the</span> period <span class="highlight">for</span> which there is household survey data available. <span class="highlight">In</span> 1994, 44% of persons over <span class="highlight">the</span> age of 55 reported incom es below <span class="highlight">the</span> official poverty lines com pared to 37% of <span class="highlight">the</span> total population. <span class="highlight">The</span> differential is even greater than these num bers suggest because <span class="highlight">the</span> <span class="highlight">elderly</span> are included <span class="highlight">in</span> <span class="highlight">the</span> overall num bers. <span class="highlight">In</span> 1997, <span class="highlight">the</span> poverty rate <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span> was nearly 50%, com pared to 45% overall. <span class="highlight">In</span> addition, <span class="highlight">the</span> severity and depth
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national incom e would cost about 1% of G D P. Expanding this to 50% of per capita G D P would raise <span class="highlight">the</span> cost proportionally to just above 2% of G D P. This represents a sizable but feasible portion of current tax revenues that are now just above 20% of G D P. If a pension program provided cash transfers to all <span class="highlight">elderly</span> 55 years old and over, there would be about 1.5 and 1.7 m illion beneficiaries <span class="highlight">in</span> 1994 and 1997, respectively. Such a program would have a m ajor im pact on poverty rates and levels <span class="highlight">for</span> <span class="highlight">the</span>
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Nanak Kakwani, H yun H . Son and Richard H inz 7 countries to strengthen and develop social protection policies and program s <span class="highlight">in</span> response to econom ic crises and rising vulnerability am ong <span class="highlight">the</span> <span class="highlight">elderly</span> (Asian D evelopm ent Bank 2001, W orld Bank 2001, United Nations 2002). <span class="highlight">The</span> initial step <span class="highlight">in</span> assessing an appropriate design and im plem entation path <span class="highlight">for</span> <span class="highlight">the</span> potential enhancem ent of <span class="highlight">the</span> social protection <span class="highlight">system</span> <span class="highlight">in</span> Kenya to address <span class="highlight">the</span> prevalence and consequences of old age poverty is to
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14 International Poverty Centre W orking Paper n&ordm; 24 2.7 PO VERTY SIM ULATIO N <span class="highlight">The</span> study sim ulates several alternative designs of a non-contributory social pension <span class="highlight">system</span> <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span>. These are intended to illustrate <span class="highlight">the</span> relative effects of alternative program design and associated costs on poverty reduction. O utcom es are estim ated not only <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span>, but also <span class="highlight">for</span> national poverty. To evaluate <span class="highlight">the</span> potential im pact of a social pension, several alternative designs <span class="highlight">for</span> such a
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Nanak Kakwani, H yun H . Son and Richard H inz 17 <span class="highlight">For</span> instance, <span class="highlight">the</span> Central province is dom inated by com m ercial farm ers. This feature of <span class="highlight">the</span> province can be attractive <span class="highlight">for</span> both retirees starting com m ercial farm ing and <span class="highlight">for</span> <span class="highlight">elderly</span> seeking <span class="highlight">for</span> em ploym ent. O n <span class="highlight">the</span> other hand, Nyanza province has a high percentage of subsistence farm ers. Pastoralism is prevalent <span class="highlight">in</span> certain districts <span class="highlight">in</span> <span class="highlight">the</span> Rift Valley, Northeastern and som e parts of <span class="highlight">the</span> Coastal and Eastern provinces. Pastoralist
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livelihood opportunities. <span class="highlight">In</span> this context, pensions <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span> could be of great im portance. Pension incom e is usually likely to be pooled within households, and younger m em bers have been dem onstrated to benefit from it. Table 3.7 illustrates one of <span class="highlight">the</span> m ain effects of <span class="highlight">elderly</span> caring <span class="highlight">for</span> children by exam ining <span class="highlight">the</span> school attendance of children from <span class="highlight">elderly</span> headed households. School-age children are defined as those aged between 6 and 17, which corresponds to <span class="highlight">the</span> current Kenyan education <span class="highlight">system</span>
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20 International Poverty Centre W orking Paper n&ordm; 24 children living <span class="highlight">in</span> other households. This suggests that children living <span class="highlight">in</span> <span class="highlight">elderly</span> headed households suffer greater financial hardship compared to those living <span class="highlight">in</span> non-<span class="highlight">elderly</span> ones. &ldquo;O ther&rdquo; as a reason other than <span class="highlight">the</span> specific six reasons, is <span class="highlight">the</span> next highest cause after fees cited by <span class="highlight">the</span> children <span class="highlight">for</span> not com pleting <span class="highlight">the</span> education cycle. <span class="highlight">The</span> children who responded no interest as a reason <span class="highlight">for</span> not attending school is also significant, at 8.8 percent
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private dispensaries. <span class="highlight">For</span> those under 60, <span class="highlight">the</span> m ost frequent action when sick is also to visit a pharm acy (74 percent), followed by consulting a dispensary (12.4 percent). Attending a health centre or hospital is m ore com m on <span class="highlight">for</span> <span class="highlight">the</span> non-<span class="highlight">elderly</span> group com pared to <span class="highlight">the</span> <span class="highlight">elderly</span> one. <span class="highlight">The</span> 1994 W M S show s that nationally, 10.16 percent of <span class="highlight">the</span> <span class="highlight">elderly</span> over 60 w ho are sick do not receive treatment. <span class="highlight">The</span> corresponding figure increased to 19.10 percent <span class="highlight">in</span> 1997. <span class="highlight">For</span> <span class="highlight">the</span> w hole population, <span class="highlight">the</span> figures <span class="highlight">for</span> not
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Nanak Kakwani, H yun H . Son and Richard H inz 27 FIGURE 4.4 Literacy status of <span class="highlight">elderly</span> pensioners 74.5 25.5 79.1 20.9 74.1 25.9 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 All pensioners Pensioners 55 &amp; over Pensioners 60 &amp; over Literate Illiterate Source: Authors&rsquo; calculations based on <span class="highlight">the</span> 1994 W M S. 4.4 PENSIO NERS LIVING W ITH CH ILD REN <span class="highlight">In</span> Kenya, <span class="highlight">the</span> m ajor roles of older people can be identified as: child care givers <span class="highlight">for</span> em ployed fam ily m em bers with children; and care
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<span class="highlight">the</span> asset ownership of those without access to pensions. <span class="highlight">The</span> results reveal that <span class="highlight">elderly</span>-headed households with pensions tend to own large land parcels, and it was observed that m ost households own no land or little land, seriously disadvantaging their ability to earn a livelihood. Land holding is defined as land owned or operated by a household used either <span class="highlight">for</span> crops or livestock rearing. <span class="highlight">In</span> terms of mean land holding size, <span class="highlight">the</span> difference betw een <span class="highlight">the</span> <span class="highlight">elderly</span>-headed households w ith and w ithout
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<span class="highlight">in</span> Kenya. <span class="highlight">The</span> <span class="highlight">elderly</span> without pensions tend to have m ore access to cars than their counterpart <span class="highlight">elderly</span>. Radios and TV sets are m ore com m only owned assets com pared to assets like cars. This m ay not only be a reflection of affordability, but also <span class="highlight">the</span> practicalities of daily life. O n average, <span class="highlight">elderly</span> having access to pensions own m ore radios and TV sets than those without pensions. <span class="highlight">In</span> <span class="highlight">the</span> case of life insurance, 2.89 percent of <span class="highlight">the</span> population <span class="highlight">in</span> 1994 had life insurance. O f <span class="highlight">the</span> <span class="highlight">elderly</span>, there is a
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pensions, a higher proportion of <span class="highlight">elderly</span>-headed households w ith pensions have access to safe sanitation and electricity. These findings suggest that <span class="highlight">elderly</span>-headed households receiving pensions tend to have a better quality of living standards than those w ithout pensions. O n <span class="highlight">the</span> whole, <span class="highlight">the</span> lim ited pension <span class="highlight">system</span> of Kenya appears to provide a m eaningful source of incom e support <span class="highlight">for</span> <span class="highlight">the</span> sm all proportion of <span class="highlight">elderly</span> persons that receive benefits. Those who report pension receipt indicate far better
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current pension <span class="highlight">system</span> <span class="highlight">for</span> form al sector workers, although sm all, is reaching persons within <span class="highlight">the</span> lowest incom e groups. 5.2 PENSIO NS AND TH E PRO BABILITY O F BEING PO O R As a second step <span class="highlight">in</span> identifying <span class="highlight">the</span> im pact of current pension incom e on poverty a probit m odel was developed to evaluate <span class="highlight">the</span> determ inants of <span class="highlight">the</span> probability that a household m em ber living <span class="highlight">in</span> a household headed by an <span class="highlight">elderly</span> person will be poor. A m ultivariate setting enables <span class="highlight">the</span> identification of <span class="highlight">the</span> im pact of having a
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This study has also calculated <span class="highlight">the</span> PPP index <span class="highlight">in</span> <span class="highlight">the</span> hypothetical case of a universal pension program <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span>. Suppose that every <span class="highlight">elderly</span> person over 55 or 60 years old receives a non-contributory pension from <span class="highlight">the</span> governm ent. Is this scenario likely to be m ore pro-poor than <span class="highlight">the</span> actual pension program ? Using both <span class="highlight">the</span> 1994 and 1997 W M S, Table 6.2 attem pts to seek <span class="highlight">the</span> answer to this question. TABLE 6.2 Pro-Poor Policy index <span class="highlight">for</span> universal pensions to <span class="highlight">elderly</span> living <span class="highlight">in</span> rural and urban areas
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ho are w orking <span class="highlight">in</span> agricultural or construction sectors. Surprisingly, <span class="highlight">the</span> results reveal that giving pensions to unemployed <span class="highlight">elderly</span> do not result <span class="highlight">in</span> a pro-poor outcome. These conclusions generally hold <span class="highlight">for</span> both <span class="highlight">the</span> 1994 and 1997 years. TABLE 6.3 Pro-Poor Policy index <span class="highlight">for</span> universal pension to vulnerable groups of <span class="highlight">elderly</span> Targeting 55 years &amp; over 60 years &amp; over 1994 <span class="highlight">Elderly</span> living alone 0.40 0.43 Widowed <span class="highlight">elderly</span> 0.87 0.87 Subsistence farming <span class="highlight">elderly</span> 1.32 1.35 Pastoralist <span class="highlight">elderly</span> 1.69 1.73
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<span class="highlight">in</span> Table 6.4. If a pension program had been designed to reach <span class="highlight">elderly</span> 55 years old and over, there would have been m ore than 1.5 and 1.7 m illion beneficiaries <span class="highlight">in</span> 1994 and 1997, respectively. O f those, 93-94 percent cam e from rural areas <span class="highlight">in</span> that period. If <span class="highlight">the</span> coverage of <span class="highlight">the</span> pension program was reduced, <span class="highlight">the</span> num ber of beneficiaries would be expected to <span class="highlight">fall</span>. This is <span class="highlight">the</span> case <span class="highlight">for</span> a pension schem e, if designed <span class="highlight">for</span> those older than 60. <span class="highlight">In</span> com puting pensions given to each beneficiary, we should
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pensions. <span class="highlight">The</span> results show that such a universal pension schem e would have cost 1.16 and 1.38 percent of G D P <span class="highlight">in</span> 1994 and 1997, respectively. As expected, when eligibility is reduced to <span class="highlight">elderly</span> over 60, costs <span class="highlight">fall</span> to less than 1 percent of G D P per capita <span class="highlight">in</span> both periods. <span class="highlight">For</span> com parison, <span class="highlight">in</span> India, <span class="highlight">the</span> total expenditure on various safety net program s including old age pensions am ounted to 1.5 &ndash; 2 percent of G D P. Brazil, Nam ibia and South Africa spend 1, 2, and 1.4 percent of G D P, respectively, on
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42 International Poverty Centre W orking Paper n&ordm; 24 show s, a given level of pension w ould have a more significant impact on poor individuals living far below <span class="highlight">the</span> poverty threshold rather than those clustered around <span class="highlight">the</span> threshold. This point is further highlighted w hen it comes to poverty among <span class="highlight">elderly</span>. Finally, as expected, <span class="highlight">the</span> pension transfer leads to substantial reduction <span class="highlight">in</span> poverty among <span class="highlight">elderly</span> and also <span class="highlight">in</span> non-negligible poverty reduction <span class="highlight">for</span> children under 15 (at <span class="highlight">the</span> national level
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provides som e prelim inary assessm ent of several key issues that should be included <span class="highlight">in</span> <span class="highlight">the</span> consideration of approaches to expand and reform <span class="highlight">the</span> pension <span class="highlight">system</span> . <span class="highlight">The</span> policy analysis is prim arily directed at evaluating <span class="highlight">the</span> costs, design and projected outcom es of providing a universal &ldquo;dem ogrant&rdquo; type social pension that would provide basic subsistence benefits to citizens reaching a specified retirem ent age. This review of <span class="highlight">the</span> status of <span class="highlight">the</span> <span class="highlight">elderly</span> <span class="highlight">in</span> Kenya indicates a pressing need <span class="highlight">for</span> som e expansion
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<span class="highlight">the</span> poverty line com pared to 45% of all children. Children <span class="highlight">in</span> <span class="highlight">the</span> care of <span class="highlight">the</span> <span class="highlight">elderly</span> indicate m uch lower rates of school attendance. D espite <span class="highlight">the</span> greater risk and associated social consequences of <span class="highlight">the</span> low econom ic status of <span class="highlight">the</span> <span class="highlight">elderly</span>, <span class="highlight">the</span> form al pension <span class="highlight">system</span> <span class="highlight">in</span> Kenya rem ains very lim ited. O nly 3.1% of people over <span class="highlight">the</span> age of 55 <span class="highlight">in</span> 1994 reported <span class="highlight">the</span> receipt of any pension incom e and 90% of these recipients were m ale. <span class="highlight">The</span> lim ited data precludes any ability to determ ine patterns <span class="highlight">for</span> <span class="highlight">the</span>
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Nanak Kakwani, H yun H . Son and Richard H inz 45 <span class="highlight">The</span> analysis also suggests that due to <span class="highlight">the</span> prevalence of poverty am ong <span class="highlight">the</span> <span class="highlight">elderly</span>, there will be lim ited gains from m eans testing such a <span class="highlight">system</span> relative to providing benefits <span class="highlight">for</span> all at a specified age. Several of <span class="highlight">the</span> m ain design param eters of such a <span class="highlight">system</span> can be considered <span class="highlight">in</span> <span class="highlight">the</span> context of basic inform ation on incom e distribution and poverty levels derived from <span class="highlight">the</span> household data. <span class="highlight">The</span> key threshold question of affordability can be
 Ageing and poverty in africa and the role of social pensions
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are statistically significant in 11 countries. TABLE 4 Income shortfall from the poverty threshold for different household types, as percent of average income short fall (poverty gap) for the country as a whole. Country No Elderly Persons Elderly...
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are statistically significant in 11 countries. TABLE 4 Income shortfall from the poverty threshold for different household types, as percent of average income short fall (poverty gap) for the country as a whole. Country No Elderly Persons Elderly Persons Only Elderly & Children Only Not Headed by Elderly Headed by Elderly All Persons Burundi 100 154 143 100 100 100 Burkina Faso 100 113 116 100 99 100 Cote d'Ivoire 93 213 224 95 121 100 Cameroon 99 151 107 97 112 100 Ethiopia 98
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2 International Poverty Centre Working Paper n&ordm; 8 Drawing on household survey information, <span class="highlight">the</span> study has delineated <span class="highlight">the</span> profile of <span class="highlight">the</span> <span class="highlight">elderly</span> <span class="highlight">for</span> 15 African countries which include both East and West African countries, and countries with a high and low prevalence of HIV-AIDS pandemic. <span class="highlight">The</span> findings show much heterogeneity across countries with respect to <span class="highlight">the</span> proportion of <span class="highlight">the</span> <span class="highlight">elderly</span> population, <span class="highlight">the</span> living arrangements and <span class="highlight">the</span> composition of households, and household headship. <span class="highlight">The</span> variations <span class="highlight">in</span>
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Nanak Kakwani and Kalanidhi Subbarao 3 While categorical targeting of a pension <span class="highlight">for</span> <span class="highlight">the</span> above groups yields <span class="highlight">the</span> maximum poverty reduction impacts, and is also fiscally sustainable even <span class="highlight">in</span> low income countries, its operational feasibility is considered to be weak. Moreover, targeting a social pension <span class="highlight">for</span> such specific groups among <span class="highlight">the</span> <span class="highlight">elderly</span> is most likely to lead to adverse incentive effects and possible induced changes <span class="highlight">in</span> household types <span class="highlight">in</span> order to claim a pension. Bearing this mind, two
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4 International Poverty Centre Working Paper n&ordm; 8 African countries is delineated <span class="highlight">in</span> section IV. Three aspects of welfare are discussed: poverty incidence, poverty gap ratio, and sickness and access to healthcare. <span class="highlight">In</span> section V <span class="highlight">the</span> implications <span class="highlight">for</span> poverty reduction of a social pension to <span class="highlight">the</span> <span class="highlight">elderly</span> under alternative targeting options are analyzed. <span class="highlight">In</span> particular, it will examine <span class="highlight">the</span> short run impacts of providing assistance to <span class="highlight">the</span> <span class="highlight">elderly</span> (living <span class="highlight">in</span> diverse household settings) to a reduction <span class="highlight">in</span>
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Nanak Kakwani and Kalanidhi Subbarao 5 children, <span class="highlight">the</span> disabled, chronically food insecure households, etc. , <span class="highlight">the</span> prospects <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span> deserve a little more attention than was possible <span class="highlight">in</span> <span class="highlight">the</span> Risk and Vulnerability Assessments largely because of <span class="highlight">the</span> changing demographics, HIV-AIDS pandemic, <span class="highlight">the</span> pace of urbanization and <span class="highlight">the</span> gradual emergence of nuclear families &ndash; all contributing to a gradual erosion of <span class="highlight">the</span> traditional safety net, viz., <span class="highlight">the</span> extended family. Given that most poor happen to be <span class="highlight">in</span>
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6 International Poverty Centre Working Paper n&ordm; 8 2. Households with only <span class="highlight">elderly</span> persons 3. Households with only children and <span class="highlight">elderly</span> persons 4. Mixed households with children, working age persons and <span class="highlight">elderly</span> 5. Households headed by <span class="highlight">elderly</span> persons 6. Households headed by working age (15-59) males or females Households <span class="highlight">in</span> groups 5 and 6 are sub-groups of household group 4. To analyze <span class="highlight">the</span> poverty status of <span class="highlight">elderly</span>, we will need a poverty line <span class="highlight">for</span> each of <span class="highlight">the</span> 15 countries. <span class="highlight">The</span> study uses
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<span class="highlight">the</span> elasticity of total poverty reduction and <span class="highlight">elderly</span> poverty reduction with respect to different targeting criteria). A detailed methodology is provided <span class="highlight">in</span> Appendix 1. 4 A PROFILE OF <span class="highlight">THE</span> <span class="highlight">ELDERLY</span> <span class="highlight">IN</span> AFRICA. A. <span class="highlight">THE</span> SETTING: CHARACTERISTICS OF SAMPLE COUNTRIES <span class="highlight">The</span> study is based on recent household survey information <span class="highlight">for</span> 15 low income Sub Saharan countries. Details of <span class="highlight">the</span> household surveys are provided <span class="highlight">in</span> <span class="highlight">the</span> Appendix. Table 1 provides some background information on basic characteristics of these
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<span class="highlight">the</span> <span class="highlight">elderly</span> may have become caregivers <span class="highlight">for</span> children, <span class="highlight">in</span> which case a household type of &ldquo;<span class="highlight">elderly</span> with children&rdquo; becomes important. Column 4 <span class="highlight">in</span> Table 2 presents <span class="highlight">the</span> percentage of population living <span class="highlight">in</span> such households. <span class="highlight">The</span> proportion ranges from a low 0.06 percent <span class="highlight">in</span> Gambia to a high 1.34 percent <span class="highlight">in</span> Uganda, 1.38 percent <span class="highlight">in</span> Malawi, and 1.30 percent <span class="highlight">in</span> Burundi. 5 It is worth noting that <span class="highlight">the</span> household type &ldquo;<span class="highlight">elderly</span> with children&rdquo; existed even prior to <span class="highlight">the</span> AIDS pandemic with working age adults migrating to
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generally <span class="highlight">the</span> main breadwinner <span class="highlight">in</span> <span class="highlight">the</span> household.) 6 d. How statistically significant are these difference? Are <span class="highlight">the</span> patterns similar <span class="highlight">for</span> <span class="highlight">the</span> incidence of <span class="highlight">the</span> poverty gap ratio? These questions are explored below. <span class="highlight">The</span> results <span class="highlight">for</span> question (a) above presented <span class="highlight">in</span> Figure 2.7 <span class="highlight">In</span> eleven out of fifteen countries, <span class="highlight">the</span> incidence of poverty among households <span class="highlight">in</span> which <span class="highlight">the</span> <span class="highlight">elderly</span> are living (we call them &ldquo;mixed households&rdquo;) is higher than <span class="highlight">the</span> average; <span class="highlight">in</span> nine countries <span class="highlight">the</span> differences are statistically significant
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is exacerbated when they become caregivers <span class="highlight">for</span> children. <span class="highlight">In</span> Malawi, Uganda and Zambia, households <span class="highlight">in</span> which <span class="highlight">the</span> <span class="highlight">elderly</span> are living with children is 20 percentage points higher than <span class="highlight">the</span> average and statistically significant. Question (c) is addressed <span class="highlight">in</span> Figure 4. <span class="highlight">In</span> 12 out of 15 countries <span class="highlight">the</span> incidence of poverty <span class="highlight">in</span> households headed by <span class="highlight">the</span> <span class="highlight">elderly</span> is higher than <span class="highlight">the</span> average; <span class="highlight">the</span> differences are statistically significant <span class="highlight">in</span> 11 countries. An interesting finding is that <span class="highlight">the</span> &ldquo;<span class="highlight">elderly</span> living alone
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proportion of children <span class="highlight">in</span> poverty, alongside <span class="highlight">the</span> average <span class="highlight">for</span> <span class="highlight">the</span> whole population, and <span class="highlight">the</span> proportion of <span class="highlight">elderly</span> <span class="highlight">in</span> poverty. <span class="highlight">The</span> incidence of poverty among <span class="highlight">the</span> <span class="highlight">elderly</span> and among <span class="highlight">the</span> children is about <span class="highlight">the</span> same <span class="highlight">in</span> most countries; <span class="highlight">the</span> incidence of poverty among <span class="highlight">the</span> <span class="highlight">elderly</span> is more than 5 percentage points higher than that of children <span class="highlight">in</span> Cote d&rsquo;Ivore, Malawi and Zambia. On <span class="highlight">the</span> other hand, <span class="highlight">the</span> incidence of
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Nanak Kakwani and Kalanidhi Subbarao 13 poverty among <span class="highlight">the</span> children is more than 5 percentage points than that of <span class="highlight">elderly</span> <span class="highlight">in</span> Madagascar, Mozambique and Nigeria. <span class="highlight">The</span> pattern remains <span class="highlight">the</span> same even when disaggregated by rural/urban location (tables not presented). <span class="highlight">The</span> above findings strongly confirm <span class="highlight">the</span> <span class="highlight">elderly</span> disadvantage especially when <span class="highlight">the</span> <span class="highlight">elderly</span> have become either principal breadwinners <span class="highlight">for</span> <span class="highlight">the</span> family, or have become caregivers <span class="highlight">for</span> children. <span class="highlight">For</span> most countries <span class="highlight">the</span> differences between <span class="highlight">the</span>
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are statistically significant <span class="highlight">in</span> 11 countries. TABLE 4 Income shortfall from <span class="highlight">the</span> poverty threshold <span class="highlight">for</span> different household types, as percent of average income short <span class="highlight">fall</span> (poverty gap) <span class="highlight">for</span> <span class="highlight">the</span> country as a whole. Country No <span class="highlight">Elderly</span> Persons <span class="highlight">Elderly</span> Persons Only <span class="highlight">Elderly</span> &amp; Children Only Not Headed by <span class="highlight">Elderly</span> Headed by <span class="highlight">Elderly</span> All Persons Burundi 100 154 143 100 100 100 Burkina Faso 100 113 116 100 99 100 Cote d'Ivoire 93 213 224 95 121 100 Cameroon 99 151 107 97 112 100 Ethiopia 98
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16 International Poverty Centre Working Paper n&ordm; 8 D. RURAL/URBAN DIFFERENCES There are clearly significant rural/urban differences. With respect to single <span class="highlight">elderly</span> persons, a much higher proportion of individuals are poor <span class="highlight">in</span> rural areas compared with urban areas <span class="highlight">in</span> every country. (Figure 7) <span class="highlight">The</span> pattern remains <span class="highlight">the</span> same <span class="highlight">for</span> other household types, viz., households with <span class="highlight">elderly</span> and children, and households headed by <span class="highlight">the</span> <span class="highlight">elderly</span>. (<span class="highlight">The</span> results are not presented.) <span class="highlight">The</span> relatively higher proportion of
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<span class="highlight">the</span> <span class="highlight">elderly</span>. <span class="highlight">The</span> main purpose is to assess which targeting option makes sense, i.e., yields <span class="highlight">the</span> maximum possible gains <span class="highlight">in</span> national poverty reduction, with a given budget and with a given benefit level. <span class="highlight">The</span> resources required (as per cent of GDP) to eliminate <span class="highlight">the</span> poverty gap among all <span class="highlight">elderly</span> women and men and others is shown <span class="highlight">in</span> Table 6. Compared with <span class="highlight">the</span> cost of filling <span class="highlight">the</span> poverty gap <span class="highlight">for</span> other categories, <span class="highlight">the</span> cost of filling <span class="highlight">the</span> poverty gap <span class="highlight">for</span> <span class="highlight">elderly</span> men and women is not very high <span class="highlight">for</span> most
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18 International Poverty Centre Working Paper n&ordm; 8 households headed by <span class="highlight">the</span> <span class="highlight">elderly</span> &ndash; clearly not affordable <span class="highlight">for</span> most countries. Even to fill <span class="highlight">the</span> poverty gap among <span class="highlight">the</span> <span class="highlight">elderly</span> with children &ndash; a small proportion of <span class="highlight">the</span> population <span class="highlight">in</span> all countries &ndash; <span class="highlight">the</span> resources required ranged from 0.1 to 0.5 percent of GDP. TABLE 7 Money as % of GDP required to eliminate poverty gap by household type Country No <span class="highlight">elderly</span> persons <span class="highlight">Elderly</span> persons only <span class="highlight">Elderly</span> &amp; children only Mixed households Not headed by
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poverty reduction of targeting social assistance pension to households with <span class="highlight">elderly</span> and children (columns 4) is higher than what could be obtained by targeting it to <span class="highlight">the</span> <span class="highlight">elderly</span> only group (column 2). <span class="highlight">The</span> poverty reduction impacts of targeting <span class="highlight">the</span> household type &ldquo;households with <span class="highlight">elderly</span> and children&rdquo; are particularly large <span class="highlight">in</span> two countries devastated by AIDS, viz., Uganda and Malawi. It is worth noting, however, targeting this particular household type <span class="highlight">for</span> social pension cannot solve <span class="highlight">the</span> wider problem of
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household types and poverty status. However, implementing a pension program targeted to specific household types may pose enormous difficulties. <span class="highlight">The</span> potential <span class="highlight">for</span> adverse incentive effects can be large. <span class="highlight">For</span> example, if &ldquo;single&rdquo; <span class="highlight">elderly</span> are targeted <span class="highlight">for</span> a social pension, it is just possible an <span class="highlight">elderly</span> person (a grandma or a grandpa) currently living <span class="highlight">in</span> an extended family household setting might be &ldquo;kicked out&rdquo; to fetch a pension. If a household type such as &ldquo;<span class="highlight">elderly</span> and children&rdquo; are targeted, it is just
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1.7 -6.7 -2.2 Kenya -3.0 -2.4 -15.3 -2.8 Madagascar -3.4 -3.0 -26.4 -2.9 Mozambique -1.5 -1.3 -8.9 -1.3 Malawi -1.5 -1.3 -9.5 -1.5 Nigeria -3.1 -2.5 -14.0 -2.7 Uganda -3.3 -2.7 -14.1 -2.5 <span class="highlight">The</span> simulations also assume that <span class="highlight">the</span> pension, though delivered to <span class="highlight">the</span> <span class="highlight">elderly</span> person, is shared within <span class="highlight">the</span> household &ndash; a realistic assumption <span class="highlight">in</span> <span class="highlight">the</span> African context. <span class="highlight">The</span> poverty reduction impacts of targeting to all <span class="highlight">elderly</span> persons, all poor <span class="highlight">elderly</span> persons, are shown <span class="highlight">in</span> Table 10 (<span class="highlight">for</span> head count poverty) and
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Nanak Kakwani and Kalanidhi Subbarao 23 Another way to assess <span class="highlight">the</span> superiority (or lack thereof) of targeting <span class="highlight">the</span> poor <span class="highlight">elderly</span> versus all <span class="highlight">elderly</span>, and various household structures <span class="highlight">in</span> which <span class="highlight">the</span> <span class="highlight">elderly</span> are living, is to compute <span class="highlight">the</span> targeting indicator (see Appendix <span class="highlight">for</span> methodology). This is done <span class="highlight">in</span> Tables 12. If <span class="highlight">the</span> computed targeting indicator is greater than 1, then <span class="highlight">the</span> same amount of budget targeted to that group as social pension will result <span class="highlight">in</span> a greater reduction <span class="highlight">in</span> national poverty than
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Mozambique 2.92 1.75 1.93 1.15 Malawi 3.13 2.18 2.24 1.55 Nigeria 1.68 0.99 1.00 0.55 Uganda 1.86 1.27 0.97 0.69 Zambia 1.68 1.06 1.33 0.84 One way to make <span class="highlight">the</span> social pension affordable is to lower <span class="highlight">the</span> benefit level, means-tested (restricted to <span class="highlight">the</span> poor <span class="highlight">elderly</span>), and eligibility restricted to 65+. If one were to fix <span class="highlight">the</span> benefit level at 35% poverty threshold, <span class="highlight">the</span> budgetary cost would be exactly equal to one half of <span class="highlight">the</span> reported results. <span class="highlight">For</span> example, <span class="highlight">in</span> Zambia, with a benefit level of one-third of <span class="highlight">the</span>
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Nanak Kakwani and Kalanidhi Subbarao 25 contributory social pensions <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span> from a (national) poverty reduction stand point, caution is needed <span class="highlight">in</span> selecting <span class="highlight">the</span> right targeted approach while operationalizing a social pension policy.13 TABLE14 Percentage change <span class="highlight">in</span> national headcount by targeting assistance equal to 70 % and 35% of average poverty line to poor <span class="highlight">elderly</span> Poor <span class="highlight">Elderly</span> 60 + Poor <span class="highlight">elderly</span> 65 + Country Pension = .70% of Poverty threshold Pension = .35% of Poverty
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26 International Poverty Centre Working Paper n&ordm; 8 annum <span class="highlight">in</span> <span class="highlight">the</span> recent past. This suggests that <span class="highlight">the</span> fiscal leverage from economic growth is likely to be extremely limited, if not nil, <span class="highlight">for</span> low income countries of Africa <span class="highlight">in</span> <span class="highlight">the</span> medium term, and so <span class="highlight">the</span> argument that universal social pensions can sustained <span class="highlight">in</span> a &ldquo;growth scenario&rdquo; is tenuous at best. <span class="highlight">In</span> sum, it appears desirable, <span class="highlight">in</span> <span class="highlight">the</span> larger interest of <span class="highlight">the</span> <span class="highlight">elderly</span> themselves, to target <span class="highlight">the</span> pension to <span class="highlight">the</span> poor among <span class="highlight">the</span> <span class="highlight">elderly</span> keeping <span class="highlight">the</span> age cut off
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Nanak Kakwani and Kalanidhi Subbarao 27 households, <span class="highlight">the</span> probability of male children attending <span class="highlight">the</span> school increases. As can be expected, <span class="highlight">in</span> urban areas <span class="highlight">the</span> elasticity is generally positive and high <span class="highlight">in</span> all countries, implying that male children <span class="highlight">in</span> urban settings are most likely to attend schools. It also implies that <span class="highlight">the</span> potential adverse impacts on schooling is nil <span class="highlight">for</span> male children living with <span class="highlight">the</span> <span class="highlight">elderly</span>. TABLE 15 Elasticity of probability of male children attending school Country Welfare
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28 International Poverty Centre Working Paper n&ordm; 8 TABLE 16 Elasticity of probability of female children attending school 7 CONCLUSIONS AND IMPLICATIONS <span class="highlight">FOR</span> POLICY. <span class="highlight">The</span> main objective of <span class="highlight">the</span> study is to delineate <span class="highlight">the</span> poverty among <span class="highlight">the</span> <span class="highlight">elderly</span> <span class="highlight">in</span> 15 low income Sub Saharan countries and to assess <span class="highlight">the</span> role of social pensions <span class="highlight">for</span> <span class="highlight">the</span> <span class="highlight">elderly</span>. <span class="highlight">The</span> study finds that, when defined by household structure, <span class="highlight">the</span> <span class="highlight">elderly</span> only, <span class="highlight">elderly</span> with children, and <span class="highlight">the</span> <span class="highlight">elderly</span>-headed households are poorer than others <span class="highlight">in</span>
 Measuring the impact of prices on inequality: with applications to Thailand and Korea
for the 8th Plan and Monitoring and Evaluation, National Economic and Social Development Board Bangkok. Kakwani, N. (1980), “On a Class of Poverty Measures”, Econometrica 48, 437-46. Kakwani, N. (1977), “Applications of Lorenz Curves in Economic Analysis...
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for the 8th Plan and Monitoring and Evaluation, National Economic and Social Development Board Bangkok. Kakwani, N. (1980), “On a Class of Poverty Measures”, Econometrica 48, 437-46. Kakwani, N. (1977), “Applications of Lorenz Curves in Economic Analysis”, Econometrica 45, 719-27.
26 0 http://www.undp-povertycentre.org/pub/IPCWorkingPaper11.pdf#page=26 www.undp-povertycentre.org/pub/IPCWorkingPaper11.pdf#page=26
<span class="highlight">for</span> <span class="highlight">the</span> 8th Plan and <span class="highlight">Monitoring</span> and Evaluation, National Economic and Social Development Board Bangkok. Kakwani, N. (1980), &ldquo;On a Class of Poverty Measures&rdquo;, Econometrica 48, 437-46. Kakwani, N. (1977), &ldquo;Applications of Lorenz Curves <span class="highlight">in</span> Economic Analysis&rdquo;, Econometrica 45, 719-27.
 Linkages between Pro-Poor Growth, Social Programmes and Labour Market: The Recent Brazilia...
the num ber of adults in the household shows an increasing trend. These findings suggest that cash transfer program m es relating to children can be further expanded because of the increase in the num bers of the working population in Brazil. ...
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the num ber of adults in the household shows an increasing trend. These findings suggest that cash transfer program m es relating to children can be further expanded because of the increase in the num bers of the working population in Brazil. The situation is the opposite in all aspects for the old-age group. The share in the total population is higher than that using inequality-adjusted weights and this gap has increased over the decade. Inequality-adjusted per capita elderly was represented as 3.6
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<span class="highlight">the</span> num ber of adults <span class="highlight">in</span> <span class="highlight">the</span> household shows an increasing trend. These findings suggest that cash transfer program m es relating to children can be further expanded because of <span class="highlight">the</span> increase <span class="highlight">in</span> <span class="highlight">the</span> num bers of <span class="highlight">the</span> working population <span class="highlight">in</span> Brazil. <span class="highlight">The</span> situation is <span class="highlight">the</span> opposite <span class="highlight">in</span> all aspects <span class="highlight">for</span> <span class="highlight">the</span> old-age group. <span class="highlight">The</span> share <span class="highlight">in</span> <span class="highlight">the</span> total population is higher than that using inequality-adjusted weights and this gap has increased over <span class="highlight">the</span> decade. Inequality-adjusted per capita <span class="highlight">elderly</span> was represented as 3.6
 Old-Age Poverty and Social Pensions in Kenya
increased between 1994 and 1997 (the period for which there are household survey data available). These poverty rates have various secondary consequences. There is a high rate of grandparents caring for children because of the HIV/AIDS epidemic. This exposes children to ...
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increased between 1994 and 1997 (the period for which there are household survey data available). These poverty rates have various secondary consequences. There is a high rate of grandparents caring for children because of the HIV/AIDS epidemic. This exposes children to the consequences of old age poverty. A higher proportion of children living in elderly headed households are poorer than for the average. Also, children living in these households have lower rates of school attendance than others. The current
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increased between 1994 and 1997 (<span class="highlight">the</span> period <span class="highlight">for</span> which there are household survey data available). These poverty rates have various secondary consequences. There is a high rate of grandparents caring <span class="highlight">for</span> children because of <span class="highlight">the</span> HIV/AIDS epidemic. This exposes children to <span class="highlight">the</span> consequences of old age poverty. A higher proportion of children living <span class="highlight">in</span> <span class="highlight">elderly</span> headed households are poorer than <span class="highlight">for</span> <span class="highlight">the</span> average. Also, children living <span class="highlight">in</span> these households have lower rates of school attendance than others. <span class="highlight">The</span> current
 On assessing pro-poorness of government programmes:international comparisons
and free school lunches – have higher values of the PPP index for the severity of poverty measure. Since the severity of poverty measure gives greater weight to the ultra-poor, the absolute benefits of low-income medical cards and free school lunch pro...
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and free school lunches – have higher values of the PPP index for the severity of poverty measure. Since the severity of poverty measure gives greater weight to the ultra-poor, the absolute benefits of low-income medical cards and free school lunch programmes flow to the ultra- poor more than the moderately poor. We have also calculated the PPP index in the hypothetical case of a universal pension system. Suppose that every elderly person over 65 years of age receives a pension from the government
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and free school lunches &ndash; have higher values of <span class="highlight">the</span> PPP index <span class="highlight">for</span> <span class="highlight">the</span> severity of poverty measure. Since <span class="highlight">the</span> severity of poverty measure gives greater weight to <span class="highlight">the</span> ultra-poor, <span class="highlight">the</span> absolute benefits of low-income medical cards and free school lunch programmes flow to <span class="highlight">the</span> ultra- poor more than <span class="highlight">the</span> moderately poor. We have also calculated <span class="highlight">the</span> PPP index <span class="highlight">in</span> <span class="highlight">the</span> hypothetical case of a universal pension <span class="highlight">system</span>. Suppose that every <span class="highlight">elderly</span> person over 65 years of age receives a pension from <span class="highlight">the</span> government
 Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty
in 1996. The transfers are m ade to the elderly or people w ith a severe disability, w hose fam ily per capita incom e is less than one quarter of the m inim um w age2 (approxim ately US$ 1/day in M arch, 2006). The value of the transfer is eq...
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in 1996. The transfers are m ade to the elderly or people w ith a severe disability, w hose fam ily per capita incom e is less than one quarter of the m inim um w age2 (approxim ately US$ 1/day in M arch, 2006). The value of the transfer is equivalent to a m onthly m inim um w age (approxim ately US$ 4/day). The benefit is independent of previous contributions to the social security system and is not subject to any conditionality. All extrem ely poor individuals over 65 years of age, w hether
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<span class="highlight">in</span> 1996. <span class="highlight">The</span> transfers are m ade to <span class="highlight">the</span> <span class="highlight">elderly</span> or people w ith a severe disability, w hose fam ily per capita incom e is less than one quarter of <span class="highlight">the</span> m inim um w age2 (approxim ately US$ 1/day <span class="highlight">in</span> M arch, 2006). <span class="highlight">The</span> value of <span class="highlight">the</span> transfer is equivalent to a m onthly m inim um w age (approxim ately US$ 4/day). <span class="highlight">The</span> benefit is independent of previous contributions to <span class="highlight">the</span> social security <span class="highlight">system</span> and is not subject to any conditionality. All extrem ely poor individuals over 65 years of age, w hether
 Confronting Capacity Constraints on Conditional Cash Transfers in Latin America: the cases...
16 International Poverty Centre Working Paper nº 38 a banking institution, which organizes the logistics of the payments, including the transport of the funds, maintaining security and providing cashiers. This experience differs from that of Brazil, for instan...
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16 International Poverty Centre Working Paper nº 38 a banking institution, which organizes the logistics of the payments, including the transport of the funds, maintaining security and providing cashiers. This experience differs from that of Brazil, for instance, which counts on a fairly developed and widespread banking network that allows an automated scheme for the delivery of transfers through money-teller machines and magnetic cards. In contrast, Red Solidaria’s transfers are handled manually and
18 0 http://www.undp-povertycentre.org/pub/IPCWorkingPaper38.pdf#page=18 www.undp-povertycentre.org/pub/IPCWorkingPaper38.pdf#page=18
16 International Poverty Centre Working Paper n&ordm; 38 a banking institution, which organizes <span class="highlight">the</span> logistics of <span class="highlight">the</span> payments, including <span class="highlight">the</span> transport of <span class="highlight">the</span> funds, maintaining security and providing cashiers. This experience differs from that of Brazil, <span class="highlight">for</span> instance, which counts on a fairly developed and widespread banking network that allows an <span class="highlight">automated</span> scheme <span class="highlight">for</span> <span class="highlight">the</span> delivery of transfers through money-teller machines and magnetic cards. <span class="highlight">In</span> contrast, Red Solidaria&rsquo;s transfers are handled manually and
 For full Report: South Africa
lower escrow con- tribution ratios—is to also create severe penalties for fraud along with strong incentives for “whistleblowers” to report abuses of the system. This means mobilizing incentives to monitor the system rather than relying pr...
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lower escrow con- tribution ratios—is to also create severe penalties for fraud along with strong incentives for “whistleblowers” to report abuses of the system. This means mobilizing incentives to monitor the system rather than relying primarily on government investigators to prevent fraud. This approach to monitoring fi- nancial market regulations was developed by Dean Baker (2003) with respect to the so-called Tobin Tax—a tax on speculative transactions in global cur- rency markets. A variation on Baker’s
148 0 http://www.undp-povertycentre.org/publications/reports/South%20Africa.pdf#page=148 www.undp-povertycentre.org/publications/reports/South%20Africa.pdf#page=1...
lower escrow con- tribution ratios&mdash;is to also create severe penalties <span class="highlight">for</span> fraud along with strong incentives <span class="highlight">for</span> &ldquo;whistleblowers&rdquo; to report abuses of <span class="highlight">the</span> <span class="highlight">system</span>. This means mobilizing incentives to monitor <span class="highlight">the</span> <span class="highlight">system</span> rather than relying primarily on government investigators to prevent fraud. This approach to <span class="highlight">monitoring</span> fi- nancial market regulations was developed by Dean Baker (2003) with respect to <span class="highlight">the</span> so-called Tobin Tax&mdash;a tax on speculative transactions <span class="highlight">in</span> global cur- rency markets. A variation on Baker&rsquo;s
 Cash benefits to disabled persons in Brazil: An analysis of the BPC � Continuous Ca...
programme’s operation, make the programme relatively w ell protected against attempts to reduce the budget in the short run. The programme makes unconditional transfers to elderly and disabled people w ho live in extreme poverty. The mont...
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programme’s operation, make the programme relatively w ell protected against attempts to reduce the budget in the short run. The programme makes unconditional transfers to elderly and disabled people w ho live in extreme poverty. The monthly payments amount to one minimum w age and the beneficiaries or their relatives w ithdraw the money through the banking system via magnetic cards. The individual cannot accumulate other benefits but the family can, w hich in reality does not occur due to the targeting of
20 0 http://www.undp-povertycentre.org/pub/IPCWorkingPaper16.pdf#page=20 www.undp-povertycentre.org/pub/IPCWorkingPaper16.pdf#page=20
programme&rsquo;s operation, make <span class="highlight">the</span> programme relatively w ell protected against attempts to reduce <span class="highlight">the</span> budget <span class="highlight">in</span> <span class="highlight">the</span> short run. <span class="highlight">The</span> programme makes unconditional transfers to <span class="highlight">elderly</span> and disabled people w ho live <span class="highlight">in</span> extreme poverty. <span class="highlight">The</span> monthly payments amount to one minimum w age and <span class="highlight">the</span> beneficiaries or their relatives w ithdraw <span class="highlight">the</span> money through <span class="highlight">the</span> banking <span class="highlight">system</span> via magnetic cards. <span class="highlight">The</span> individual cannot accumulate other benefits but <span class="highlight">the</span> family can, w hich <span class="highlight">in</span> reality does not occur due to <span class="highlight">the</span> targeting of