Argentina - Argentina's poor : a profile

Report No. 13318-AR Argentina Argentina's Poor: A Profile June 27, 1995 Human Resources Division Country Department I Latin America and the Caribbean Regional Office Document of the World Bank  CURRENCY EQUIVALENTS Currency Unit - Peso EXCHANGE RATE P$1.00 = US$1.00 FISCAL YEAR Janutary 1 - December 31  ABBREVIATIONS AFJP Pension Funds Administradoras de Fondos de Jubilaci6n y Pensiones ANSSAL National Administration of Health Insurance Administraci6n Nacional de Seguros de Salud ANSS Natinal Administration of Social Security Administraci6n Nacional de la Seguridad Social CEPA The Govemment Committee for the Study of Poverty Comite Ejecutivo para el Estudio de la Pobreza CEPAL Economic Commission for Latin America and the Caribbean Comisi6n Econ6mica para America Latina y el Caribe EPH Permanent Household Survey Encuesta Permanente de Hogares FEL Federal Education Law FNE National Employment Law Fondo Nacional de Empleo FONAVI National Housing Fund Fondo Nacional de Vivienda IPS Integrated Pension System INDEC National Statistics and Census Institute Instituto Nacional de Estadistica y Censo INTA Institute of Agricultural Technology Instituto de Tecnologia Agricola IPA Research Group on Poverty in Argentina Investigaci6n Sobre Pobreza en Argentina LFP Labor Force Participation i  MBA Municipality of Buenos Aires Municipalidad de Buenos Aires MCE Ministry of Culture and Education Ministerio de Cultura y Educacion MOL Ministry of Labor Ministerio de Trabajo y Seguridad Social NBI Unmet Basic Needs Necesidades Basicas Insatisfechas PAHO PanAmerican Health Association PAYG Pay As-You-Go PAMI Integrated Program of Medical Care Programa de Atencion Medica Integral PAN National Food Program Programa Nacional de Alimentaci6n PSE Public Sector Expenditure UTEP Executing Technical Units Unidad T6cnica Ejecutora de Programas VAT Value-Added Tax Impuesto al Valor Agregado (IVA) ii  PREFACE 1. The objective of this Poverty Report, the Bank's first on Argentina, is to review the poverty trends, identify vulnerable groups and analyze poverty profiles based on available information focussing on the period 1990 to 1993. The review is a partial one in light of the paucity of data on the rural poor. Some preliminary efforts were made to compare urban and rural profiles in order to get a national poverty snapshot, but in the end this analysis is primarily urban, focussing on the Metropolitan Buenos Aires (MBA) and provincial urban centers. A clear national need, therefore, is to augment poverty information for rural Argentina in order to complete the national panorama. 2. In carrying out the above review, the Report also assessed: (a) the effects of major macroeconomic developments on the levels and distribution of income of different social groups; (b) the trends in the market for the poor's major asset - labor; (c) the benefit incidence of public social expenditures; and (d) major issues in the social sectors. Much of this information and analysis is contained in the background volume (Technical Document). It was not the intention of the Report to make specific policy recommendations for poverty reduction. Rather it was to take stock after four years of major economic reforms of the poverty situation in the "new Argentina". This Report, therefore, should be seen as a diagnostic effort to indicate the current shape of the poverty situation in Argentina. 3. The World Bank is grateful for the assistance of the Ministry of Economy's Executive Committee for a Poverty Study in Argentina (Comite Ejecutivo para el Estudio de Pobreza en Argentina, CEPA) and INDEC which provided key background studies and information for this Report. Nevertheless, it should be made very clear that all recommendations, interpretations, and judgments are those of the Bank and the Bank alone. To complement the household survey and census information that depict the situation of the poor, the Poverty Committee carried out specific studies on the youth, the elderly and the rural poor. These studies incorporated, among other essential information, pilot participatory surveys (qualitative interviews of small samples). The extent of the participatory analysis was constrained by the time limitation for the preparation of the Poverty Report. The analysis on public social expenditures and their incidence in this Report is based on a study carried out by a consultant group under the Office of the Secretary of Economic Programming, Ministry of Economy. The study 'El Gasto Publico Social y Su Impacto Redistributivo" was issued in June 1994. 4. The Bank main mission visited Argentina in December 1993. The Report was written by Evangeline Javier (Task Manager) and Haeduck Lee (Economist) with the technical guidance of Danny Leipziger (Lead Economist, LA1DR). In the course of its preparation, reports on specific topics were provided by Anna Luiza Ozorio de Almeida (Economist, informal labor market), Scott Graham (Research Consultant), Donna MacIsaac (Research Consultant) who also provided invaluable data processing and review assistance, and Shahrzad  Gohari (Operations Officer). Advice on specific areas was provided by Lawrence Salmen (Sr. Sociologist, participatory poverty assessment); Egbert Gerken (Principal Economist, social security) and Nicholas Barr (Consultant Economist, social insurance and income transfer policy). The Report benefitted from the comments of peer reviewers Helena Ribe (AF1HR); Emmanuel Jimenez (PRDPH); and Ariel Fiszbein (LA3C1), and from suggestions from the Region's Chief Economist, Sebastian Edwards. The poverty team is also grateful to the supervision and moral support of Alain Colliou (Division Chief, LAIHR) and Julian Schweitzer (former LA4HR). Assistance in final Report production was ably provided by Patricia Trapani. Previous drafts benefitted from the production support of Aracelly Woodall, Sarah Menezes, Julie Nannucci and Diane Bouvet. iv  TABLE OF CONTENTS Page No. ABBREVIATIONS ........................................ i PREFACE ............................................ iii EXECUTIVE SUMMARY ..................... vii I. INTRODUCTION . ................................. 1 H. POVERTY DIMENSIONS IN ARGENTINA ..... ............. 3 A. Poverty Measurement Methodology ...... ............. 3 B. Poverty in Metropolitan Buenos Aires ..... ............ 6 C. Snapshot of Poverty Groups ....... ................ 9 D. Poverty Rates in Provincial Urban Centers ..... ......... 14 E. Rural Poverty ................................ 16 HI. DISTRIBUTION, INCOME AND EMPLOYMENT .19 A. General Social Trends .19 B. Income Distribution .20 C. Employment .22 D. Education and Poverty .30 IV. PUBLIC SOCIAL EXPENDITURES AND SOCIAL PROGRAMS: ISSUES .33 A. Benefit Incidence of PSE and the Weaknesses of Social Programs .36 B. Social Policy Coordination .40 V. FUTURE AGENDA FOR POVERTY REDUCTION .43 REFERENCES ......................................... 49 ANNEX TABLES: TABLE A. 1: Distribution of Family Characteristics by Poverty Group, 1993 .... ............ 59 TABLE A.2: Distribution of Labor Market Characteristics by Poverty Group, 1993 .... ............ 60 TABLE A.3: Employment History and Unemployment Duration by Poverty Group, 1989-1993 .... ........ 61 MAPS: IBRD 26727, 26728 and 26729 v  TABLES IN TEXT Page No. 2.1 Evolution of Inflation and Changes in Proportion of Population Below Poverty Line in Metropolitan Buenos Aires .... ........... 6 2.2 Evolution of Incidence, Depth, and Severity of Poverty in Metropolitan Buenos Aires. 8 2.3 Evolution of Population Share Within