Analyzing the Distributional Impact of Reforms, Volume Two

Abstract

The analysis of the distributional impact of policy reforms on the well-being or welfare of different stakeholder groups, particularly on the poor and vulnerable, has an important role in the elaboration and implementation of poverty reduction strategies in developing countries. In recent years this type of work has been labeled as Poverty and Social Impact Analysis (PSIA) and is increasingly implemented to promote evidence-based policy choices and fosters debate on policy reform options. While information is available on the general approach, techniques and tools for distributional analysis, each sector displays a series of specific characteristics. These have implications for the analysis of distributional impacts, including in terms of the types of impacts and transmission channels that warrant particular attention, the tools and techniques most appropriate, the data sources typically utilized, and the range of political economy factors most likely to affect the reform process. Analyzing the Distributional Impact of Reforms is the second volume in a series, and covers six key areas of policy reform that are likely to have significant effects on distribution and poverty: pension, health, labor market, public sector downsizing, taxation, and decentralization. It also provides a brief overview of the modeling approaches for macroeconomic shocks and policies. This volume is a companion to a first volume, Analyzing the Distributional Impact of Reforms, edited by Aline Coudouel and Stefano Paternostro (2005), which covered reforms in the areas of trade, monetary and exchange rate policy, utility provision, agricultural markets, land policy, and education. Each chapter is organized around the different transmission channels through which policy reforms can be expected to affect the population. The chapters provide an overview of the typical direction and magnitude of the expected impacts; the implementation mechanisms through which reforms are typically carried out; the stakeholders who are likely to be affected by the reform, positively or negatively, or who are likely to affect the reform; and the methodologies typically used to analyze the distributional impact. Each chapter illustrates these points with examples, applications, references, sources and a bibliography.