How did workers benefit from Bolivia's emergency social fund?

414 30 THE WORLD BANK ECONOMIC REVIEW, VOL. 5, NO. 2: 367-393 (:F't M"P M lqcl( How Did Workers Benefit from Bolivia's Emergency Social Fund? John Newman, Steen Jorgensen, and Menno Pradhan Bolivia's Emergency Social Fund (ESF) was established to cushion the adverse effects on the poor of the economic crisis and subsequent stabilization program in the 1 980s and to facilitate transition through the phases of structural adjustment. The ESF provided temporary employment opportunities by funding small-scale, labor-intensive projects that were proposed by local governmental and nongovernmental organizations. This article measures the impact of the ESF program on employment and income of workers in the ESF projects. For the average ESF worker, hourly wages were 12.8 percent higher, the work week was 9.5 hours longer, and weekly earnings were 32 percent higher than what they would have been without the ESF. Taking into account the probability that the individual may not have worked without the ESF leads to larger gains. The greatest benefits from participating in the program were received by those who would have been least well-off without it. Bolivia's Emergency Social Fund (ESF) represented one of the first World Bank- funded efforts to address the social costs of adjustment through creating a separate compensatory program, rather than by modifying the implementation of a structural adjustment program in light of the expected social costs. Al- though the primary emphasis of this program was to provide temporary employ- ment opportunities, it differed from more typical government works projects in several important ways. First, the program was intended to be demand-driven. The management team of the ESF approved or rejected funding requests for small-scale, labor-intensive projects that came from local governmental and nongovernmental agencies, but did not propose any projects themselves. Sec- ond, the ESF did not directly employ the workers. Rather, the projects were executed and the workers hired by private subcontractors working under the supervision of the local agency and the central management team of the ESF. Third, the ESF was established explicitly as a temporary financial institution outside of the normal bureaucratic structure of the government. There are several avenues through which a compensatory program such as the John Newman is in the Population and Human Resources Department, and Steen Jorgensen is in the Southern Africa Department, both at the World Bank. Menno Pradhan is currently a Ph.D. candidate at the Universiteit van Amsterdam. The authors would like to thank Marcelo Mercado and Alejandro Mercado of the Instituto Nacional de Estadistica of Bolivia and Fernando Campero of the Fondo Social de Emergencia of Bolivia for their assistance in this project.